-8-
use the value either on December 31 of the prior year
or on a date within a reasonable period before that
year's distribution.
Rev. Rul. 2002-62, sec. 202(e), 2002-2 C.B. at 711, also
discusses the effect of changes to account balances, as follows:
(e) Changes to account balance. Under all three
methods, substantially equal periodic payments are
calculated with respect to an account balance as of the
first valuation date selected in paragraph (d) above.
Thus, a modification to the series of payments will
occur if, after such date, there is (i) any addition to
the account balance other than gains or losses, (ii)
any nontaxable transfer of a portion of the account
balance to another retirement plan, or (iii) a rollover
by the taxpayer of the amount received resulting in
such amount not being taxable. [Emphasis supplied.]
As mentioned above, if there is a "modification" within a 5-
year period beginning on the date of the first payment or, if
later, before the employee attains age 59-1/2, then the recapture
rule of section 72(t)(4) provides that the exception to the 10-
percent additional tax does not apply, and the taxpayer's tax for
the year of modification shall be increased by an amount which,
but for the exception, would have been imposed, plus interest for
the deferral period. Sec. 74(t)(4).
Rev. Rul. 2002-62, supra, also provides authorization for
taxpayers to make a one-time change to the required minimum
distribution method. Rev. Rul. 2002-62, sec. 2.03(b), 2002-2
C.B. at 711, states as follows:
One-time change to required minimum distribution
method. An individual who begins distributions in a
year using either the fixed amortization method or the
fixed annuitization method may in any subsequent year
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Last modified: March 27, 2008