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January 12, 2009 at 11:00 AM
The Internal Revenue Service has issued guidance aimed at financial institutions that will be helping retirees put off taking cash from individual account retirement plans.
The Worker, Retiree, and Employer Recovery Act of 2008, signed into law Dec. 23, 2008, includes a provision that waives any required minimum distributions for 2009 from 401(k) plans, 403(b) plans, some 457(b) plans and other plans that hold each participant’s benefits in an individual account.
The act also applies to individual retirement accounts.
The act RMD waiver “means that most participants and beneficiaries otherwise required to take minimum distributions from these types of accounts are not required to withdraw any amount in 2009,” IRS officials write in Notice 2009-9. If they do make a withdrawal in 2009 . . . they might be able to roll over the withdrawn amount into other eligible retirement plans.”
But the retirees still must include any previously untaxed portion of the withdrawal that they do not roll over in their taxable income, officials write.
“The act does not waive any 2008 RMDs, even for individuals who were eligible and chose to delay taking their 2008 RMD until April 1, 2009,” officials warn.
The act also does not waive any RMDs for 2010, officials write.
