3. Those households that do not need the money, and meet the requirements, can now skip a year on taking an RMD, enabling the money grow tax deferred to potentially leave more to their heirs.
4. Those over age 70 ½ can convert the amounts they would otherwise have had to take as required distributions to Roth IRAs.
5. Not taking the RMD, which is taxed as ordinary income, could put the individual into a lower overall tax bracket.
6. For beneficiaries under the 5-year rule, the 5-year deferral period to distribute the assets of a deceased person's IRA is extended by one year (e.g., if an individual died in 2007, the period would end in 2013 instead of 2012).
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7. Individuals may still choose to make IRA charitable rollover gifts during 2009.
8. This legislation does not affect 72T distributions or defined benefit plan contributions.
Individuals that have been taking RMDs for years and have grown to depend on them as a source of retirement income may still take distributions in 2009. Those that are already set up for automatic distributions, but want to take advantage of the 2009 Relief Act, should cancel their 2009 distributions.
The administration has suggested it's considering extending the waiver on RMDs to 2010. It is difficult to predict what the legislative bodies may do. It is, however, unlikely there will be a waiver for the 2008 RMD, retroactively, since it would require a refund from the federal government.
James Wagner is president and CEO with TAS (Trust Administration Services), a personal management provider of self-directed IRA retirement accounts, retirement planning services, and custody accounts.
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