A NEW TAX LAW CHANGE
A recent tax law change designed to help address the financial burden facing those who have seen their IRAs or 401(k)s shrink is expected to be signed by President Bush, officially making it law, shortly. Depending on your particular situation, you might want to consider taking action before January.
The new law suspends the Required Minimum Distribution (RMD) requirement for 2009. This waiver, which is available to everyone regardless of your total retirement account balances, applies to all so-called “defined-contribution plans,” which include 401(k) plans, 403(b) plans, 457 (b) plans, and IRA accounts. Suspending the RMD requirement allows you to keep the money in your retirement account if you choose, possibly recovering some of the loss.
This new law does not change the requirement for 2008. So, if you have an RMD that must be withdrawn for 2008, that must still be withdrawn. If you turned 70 ½ in 2008, you can elect to withdraw your 2008 RMD by April 1st of 2009. The new legislation does not change that because it is still a 2008 RMD, not a 2009 RMD; you would still have to withdraw that amount by April 1st of 2009.
Some who withdraw RMDs annually have it set up to occur automatically in January. If that is the case for you, and if you want to take advantage of this new law, you should contact your IRA custodian immediately to take care of that before the RMD is automatically distributed.