President George W. Bush has signed legislation to suspend temporarily a tax penalty for seniors who do not take a minimum withdrawal from their retirement accounts in 2009, including 401(k) accounts.
The Worker, Retiree and Employer Recovery Act (H.R. 7327) suspends for 1 year an IRS requirement that account holders of 401(k)-style plans must withdraw a minimum amount of money every year after they reach 70- 1/2 years old. The suspension is intended to assure that seniors are not forced to take money out of their accounts while asset values are depressed due to the economic downturn. This suspension will be available to everyone, regardless of their retirement account balances.
The bill was introduced by Representatives George Miller (D-Calif.), Charles B. Rangel (D-N.Y.), Howard P. “Buck” McKeon (R-Calif.) and Jim McCrery (R-La.).