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| Tax Tips: No Required Distributions For 2009 |
Nila Rakhit, CPA
02/19/2009
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If you or someone in your family is 70½ or older (or will be this year), here's important news: A recent law waives the requirement that a 2009 withdrawal must be taken from your retirement accounts. This includes 401(k) plans, 403(b) plans, certain 457(b) plans, and IRAs.
Normally, those 70½ or older must take a minimum required amount from their retirement accounts every year or face a 50% penalty tax on the amount required to be withdrawn but not taken. The required amount is calculated based on the owner's life expectancy and the retirement account balance as of December 31 of the previous year.
Retirees generally suffered huge losses in their retirement accounts in 2008, thanks to the crisis in the financial markets. Without the relief provided in the recent law, retirees would have to take a 2009 distribution from an already depleted account, leaving even less in the account to recover once the economic situation improves.
Unfortunately, the relief applies only to 2009 required distributions; it does not apply to required minimum distributions for 2008, so those who delayed a 2008 RMD until April 1, 2009, must still take that distribution.
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