Keeping up with the federal rules and regulations for Individual Retirement Accounts is kind of like keeping up with the constantly changing tax law. While the finer points are best left to financial planners to impart to their clients and customers, anyone who has an IRA and is near retirement age should educate themselves.

In 2009, the economy’s effect forced legislators to provide relief to retirees whose IRAs had been severely impacted by the financial markets. The law allowed IRA owners age 70½ and older to skip required minimum distributions in 2009, thereby enabling these retirees some time to recoup their losses.

Even though many investors who would have been subject to the requirement skipped their distribution in 2009, this led many to believe that they don’t have to take any money out of their IRAs in 2010 either.

Wrong! The minimum withdrawal requirement was reinstated for 2010 – and the consequences for skipping a distribution are huge. If the minimum required distribution is not received by the deadline (Dec. 31 in most cases), the tax liability is equal to 50 percent of the amount that should have been withdrawn. If you did not take the distribution, it’s best to check with a financial planner for advice.

IRA owners who turned age 70½ in 2010, however, have until April 1, 2011, to take their first distribution. Keep in mind that if you wait until next spring, you’ll have to take two withdrawals next year – your 2010 distribution and your distribution for 2011.

Converting to a Roth IRA is ideal if you want to leave your funds to your children. Although you pay taxes on all pre-tax contributions and earnings, future earnings will be tax-free. Converting to a Roth would allow your children or other inheritors to avoid paying taxes on an inherited IRA.

Roth IRA owners don’t have to take minimum distributions and IRA owners who are required to take minimum required distributions are still eligible to convert to a Roth. However, you must take your distribution for the year before you convert because that money isn’t eligible for the conversion. IRA owners who convert to a Roth by Dec. 31 must pay the entire tax liability when they file their 2010 tax return or split the income between 2011 and 2012.

Although some seniors are not entirely comfortable with technology, it does help to automate the process. Many IRA providers offer programs that automatically deposit distributions into a bank account or non-retirement investment account. You can also arrange to have taxes automatically withdrawn from IRA distributions.

Knowing the ins and outs makes us smarter investors and helps reduce our tax bill. Adult children of retirees can also help their parents make sound decisions. As always, consult your financial planner/accountant for the latest rules and regulations. They will have the knowledge you need in order to enjoy the best outcome – and your retirement years.