 NEWSLETTERS Volume 9, Issue 1 .................... February 2009 REQUIRED MINIMUM DISTRIBUTIONS WAIVED FOR 2009 On December 23, 2008 President Bush signed into law the Worker, Retiree, and Employer Recovery Act of 2008 (WRERA). This act adds code §401(a)(9)(H), which provides a temporary (one year) waiver of the calendar year 2009 Required Minimum Distribution (RMD). The RMD rules require a retirement plan to distribute a minimum amount annually to account holders who have reached their “required beginning date” (generally April 1 of the calendar year following the calendar year in which the individual attains age 70½), and to death beneficiaries of deceased account holders. The waiver applies to qualified defined contribution plans (e.g., 401(k) and profit sharing plans), governmental 457 plans, 403(b) plans, 403(a) plans, and individual retirement accounts. The waiver does not apply to defined benefit plans. WRERA responds to the economic downturn that has resulted in significant reductions in the value of many retirement accounts. A distribution from an account that has suffered significant losses has a long term adverse impact on the account’s ability to recover in future years. The new law permits an individual to skip the RMD for the 2009 calendar year. By skipping the RMD, the monies that would have been distributed are left in the account where they may recover from losses over time. For the 2010 calendar year, a RMD will be calculated the same as in prior years. Skipping the 2009 RMD will not change that calculation. It should be noted, that by skipping the 2009 RMD, the 2010 RMD will be increased due to the December 31, 2009 balance not being reduced by the 2009 RMD.
If you have any questions about
required minimum distributions, please do not hesitate to contact Administrative
Retirement Services, Inc. © Administrative Retirement Services, Inc. 2009 Published by Administrative Retirement Services, Inc., Copyright 2001 by Administrative Retirement Services, Inc. Reproduction in whole or in part is prohibited except by written permission. All rights are reserved. Information has been obtained by Administrative Retirement Services, Inc. from sources believed to be reliable. However, because of the possibility of human or mechanical error by our sources, Administrative Retirement Services, Inc. or others, Administrative Retirement Services, Inc. does not guarantee the accuracy, adequacy, or completeness of any information and is not responsible for any errors or omissions or the result obtained from the use of such information. Readers should seek specific advice before acting with regard to the subjects mentioned here. |