It just got a little easier for retirees to shelter some money from the tax man.

After collecting feedback for a year, the Internal Revenue Service has finalized its new rules for required distributions from retirement plans. The basics remain the same: The year in which taxpayers reach age 70¿, they'll have to begin withdrawing a certain minimum amount from their IRA

unless it's a Roth or 401(k) plan every year.

That's usually bad news for retirees who have built up a sizeable nest egg and want to leave the money growing tax-deferred for as long as possible, perhaps even leaving it to their heirs. The amount of the required distribution was based on life expectancy tables that weren't very optimistic.

The new rules include new life expectancy tables that assume longer life spans and, consequently, lower required distributions.

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For instance, a retiree who turned 70 earlier this year would have had a life expectancy of 16 years under the old rules, which date back to 1987. If that 70-year-old has $200,000 in an IRA or 401(k), for instance, he or she would be required to begin annual withdrawals of at least $12,500 in 2002, according to tax research firm CCH. (The math is simple: $200,000 divided by a life expectancy of 16 years equals $12,500 a year.)

Under last year's proposed rule change, that withdrawal amount would have been $7,634, based on a life expectancy of 26.2 years. The new, finalized rules hold even better news: The expected life of a 70-year-old inched up to 27.4 years, translating to a $7,299 minimum distribution. That retiree can now allow the $5,200 annual difference to continue to grow tax-deferred indefinitely.

The final rules formally take effect Jan. 1, 2003, but taxpayers can take advantage of them immediately. For 2002, taxpayers will have three options: the final regulations, the proposed rules issued last year, or the original 1987 regulations. Thereafter, of course, taxpayers will have to abide by the new rules.

And come 2003, taxpayers won't even have to do their own math: Brokers, banks and other IRA trustees will be required to calculate the exact amount of a customer's required distribution. In 2004, IRA trustees will also have to report to the IRS when a taxpayer is required to take a distribution, although they won't have to report the amount of the distribution, as had been proposed a year ago.

But while the new rules offer some good news, the penalty for disobedience is as stiff as ever: The IRS will take 50% of any amount that should have been withdrawn but wasn't.