Required Minimum Distribution (RMD) Relief

March 2009


Dear Client:

The Worker, Retiree, and Employer Recovery Act of 2008 (the 2008 Recovery Act) contains a tax law change that will give older taxpayers some much needed financial flexibility;  the new provision allows senior citizens to keep money in retirement accounts that they are typically required by law to withdraw once they reach age 70 ½.  Here is a brief summary of this new provision:

The 2008 Recovery Act waives the required minimum distribution for 2009.  This means you can leave the amounts in your account without suffering penalties.  This waiver applies to IRAs and defined contribution plans, including distributions from 401(k), 403(b), and state-sponsored 457(b) accounts and is available to everyone regardless of their total retirement account balances.  However, the waiver is only for amounts otherwise required to be distributed for the 2009 tax year.  If you or your spouse turned age 70 ½ in 2008 and are planning to delay your 2008 distribution until 4/1/09, (the date the law requires that your first required distribution to be made), this distribution must still be made.  It is considered a 2008 distribution even though it is being made in 2009.  Also, unless Congress extends this waiver, distributions will again be required after 2009.

If you would like to discuss this matter further, please do not hesitate to call.

Very truly yours,


Edward J. McSweeney, CPA/ABV

Category: Newsletters