The IRS is proposing to clamp new rules on IRAs, and a lot of retirees are IRAte.

The new regulations, published last summer and expected to go into effect next year, would sharply restrict the flexibility that owners of multiple individual retirement accounts now have in meeting withdrawal requirements after retirement.

IRA owners who are over age 70 1/2 are required to take out some money -- and pay taxes on it -- each year. Under the current rules, they may satisfy this requirement, referred to in tax jargon as a distribution, by withdrawing funds from whichever of their accounts they prefer. They can meet the requirement by taking the entire amount from one account, if they wish.

But under the proposed regulations, retires -- beginning in 1988 -- would have to make a withdrawal from every account each year, a requirement that some complain could force them to sell stocks at a loss or liquidate large investments such as real estate to obtain a fraction of their value.

"Take a situation where an individual has a money market account and growth {mutual} fund and was counting on holding the growth fund. That individual would prefer to take the entire distribution from the money market fund and allow the growth fund to accumulate," said Kathy Ireland, assistant general counsel for the Investment Company Institute, a trade group for mutual funds and a foe of the new rules.

Or consider an investment "in a small growth company, where you're counting on some capital appreciation -- if you have to start taking money out it kind of defeats the purpose," she added.

IRAs have been very popular. In recent years, individuals have been able to put aside $2,000 a year toward their retirement and deduct the contribution on their income tax return. In addition, earnings on these investments are allowed to accumulate, remaining untaxed until they are withdrawn.

The deductibility of the annual contribution has been sharply restricted under the new tax law, and no one knows how popular IRAs will be in the future. But already Americans have squirreled away strikingly large sums. According to estimates by the Employee Benefit Research Institute here, investments in IRAs totaled $302 billion as of last June 30, and another $49 billion is in Keogh plans for the self-employed.

Just how many IRA owners have more than one account isn't known, but EBRI's Frank McArdle says that "clearly a large segment" of them do.

The new rules would be particularly awkward for those who put money into highly volatile investments, such as stocks are now, or into things that are hard to liquidate, such as real estate limited partnerships.

In addition, some retirees who have certificates of deposit might face penalties for early withdrawals, though some banks say they will make an exception in the case of a required distribution.

Tapping a mutual fund or selling stocks after a market plunge like the one this fall can be painful, especially if you expect the market to resume climbing next year.

"You might have to liquidate certain investments you might not want to," said Deborah Walker, a tax specialist with the accounting firm of Peat Marwick Main & Co. "That's what everyone was complaining about" at an IRS hearing on the proposed rules earlier this month, she said.

"You can have a real problem where you have an illiquid investment or something that's a terrific asset that you may not want to touch," said David M. Bradt Jr. of Arthur Andersen & Co.

The IRS was aware that it was creating problems but was faced with an enforcement problem. The existing reporting system does not allow the IRS to determine easily whether individuals are taking the required distributions. The new rules are designed to make that determination easier while placing the bulk of the burden on the institutions handling the accounts, rather than on the individuals.

As a result of comments received at the hearing and in writing, the IRS will be taking a close look at the new rule before allowing it to become final.

However, sharp questioning of witnesses by IRS officials at the hearing did not encourage some of the opponents. "I'm hoping but I'm not hopeful" that the regulations will be changed, said one.

Bradt and Andrew Zuckerman, also of Arthur Andersen, suggest that if the proposed rules do go into effect IRA owners may be able to restore the flexibility they had under the old rules by restructuring their multiple IRAs into a single one. This could be done in such a way that the new account would act as an umbrella over a variety of investments, but would be treated as a single account by the IRS.

"The trick is to find a trustee willing to be trustee for a number of different assets," Zuckerman said. "... The problem is that the insurance industry likes insurance products, banks will want to deal with things that are more bank-oriented, brokerage houses will do anything you want as long as you use their products."

In addition, trustees traditionally have been paid by the organization offering the investment, but an independent trustee presumably would charge a fee. "There has got to be a mechanism to compensate the trustee. ... A trustee with no product to sell has got to be compensated somewhere else," he said.

"Once you find that trustee, it's simple to consolidate," he said. Then the retiree will have separate accounts under that IRA and can pick and choose which to liquidate.

Zuckerman and Bradt added that if the proposed rules are implemented as written, they may create a market for independent trustees. In that case "we may see the development of a larger group" of such trustees willing to provide the service for a fee.