forced IRA/401K withdrawals at age 70 to be suspended

Posted by rick++ on December 12, 2008, 1:18 pm

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Its part of pension relief plan about to be signed by Bush today.
Good for just one year.

thomas.loc.gov

H.R.7327
Worker, Retiree, and Employer Recovery Act of 2008 (Engrossed as
Agreed to or Passed by House)

SEC. 201. TEMPORARY WAIVER OF REQUIRED MINIMUM DISTRIBUTION RULES FOR
CERTAIN RETIREMENT PLANS AND ACCOUNTS.

(a) In General- Section 401(a)(9) of the Internal Revenue Code
of 1986 (relating to required distributions) is amended by adding at
the end the following new subparagraph:

`(H) TEMPORARY WAIVER OF MINIMUM REQUIRED
DISTRIBUTION-

`(i) IN GENERAL- The requirements of this
paragraph shall not apply for calendar year 2009 to--

`(I) a defined contribution plan which
is described in this subsection or in section 403(a) or 403(b),

`(II) a defined contribution plan which
is an eligible deferred compensation plan described in section 457(b)
but only if such plan is maintained by an employer described in
section 457(e)(1)(A), or

`(III) an individual retirement plan.

`(ii) SPECIAL RULES REGARDING WAIVER PERIOD-
For purposes of this paragraph--

`(I) the required beginning date with
respect to any individual shall be determined without regard to this
subparagraph for purposes of applying this paragraph for calendar
years after 2009, and

`(II) if clause (ii) of subparagraph (B)
applies, the 5-year period described in such clause shall be
determined without regard to calendar year 2009.'.

(b) Eligible Rollover Distributions- Section 402(c)(4) of the
Internal Revenue Code of 1986 (defining eligible rollover
distribution) is amended by adding at the end the following new flush
sentence:

`If all or any portion of a distribution during 2009 is
treated as an eligible rollover distribution but would not be so
treated if the minimum distribution requirements under section 401(a)
(9) had applied during 2009, such distribution shall not be treated as
an eligible rollover distribution for purposes of section 401(a)(31)
or 3405(c) or subsection (f) of this section.'.

(c) Effective Dates-

(1) IN GENERAL- The amendments made by this section shall
apply for calendar years beginning after December 31, 2008.

(2) PROVISIONS RELATING TO PLAN OR CONTRACT AMENDMENTS-

(A) IN GENERAL- If this paragraph applies to any
pension plan or contract amendment, such pension plan or contract
shall not fail to be treated as being operated in accordance with the
terms of the plan during the period described in subparagraph (B)(ii)
solely because the plan operates in accordance with this section.

(B) AMENDMENTS TO WHICH PARAGRAPH APPLIES-

(i) IN GENERAL- This paragraph shall apply to
any amendment to any pension plan or annuity contract which--

(I) is made pursuant to the amendments
made by this section, and

(II) is made on or before the last day
of the first plan year beginning on or after January 1, 2011.

In the case of a governmental plan, subclause
(II) shall be applied by substituting `2012' for `2011'.

(ii) CONDITIONS- This paragraph shall not
apply to any amendment unless during the period beginning on the
effective date of the amendment and ending on December 31, 2009, the
plan or contract is operated as if such plan or contract amendment
were in effect.

--
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Posted by JoeTaxpayer on December 12, 2008, 1:58 pm

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rick++ wrote:

> Its part of pension relief plan about to be signed by Bush today.

> Good for just one year.

So the 2009 RMD is susspended?

--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
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Posted by Paul Thomas, CPA on December 12, 2008, 3:00 pm

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> rick++ wrote:

>> Its part of pension relief plan about to be signed by Bush today.

>> Good for just one year.

> So the 2009 RMD is susspended?

Seeing how the penalty for ~not~ taking out the RMD is suspended, that
pretty much means that there is no tax downside for ~not~ taking the RMD.
Cash flow needs will prevail here I suspect.

--
Paul A. Thomas, CPA
Watkinsville, Georgia

--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>

Posted by JoeTaxpayer on December 12, 2008, 3:24 pm

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Paul Thomas, CPA wrote:

> Seeing how the penalty for ~not~ taking out the RMD is suspended, that

> pretty much means that there is no tax downside for ~not~ taking the RMD.

> Cash flow needs will prevail here I suspect.

Or an opportunity to convert to Roth to fill the the tax bracket. I have
an 82 yr old whose RMDs are getting up there. This will help that effort.
Joe

--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>

Posted by Alan on December 12, 2008, 3:56 pm

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Paul Thomas, CPA wrote:

>> rick++ wrote:

>>> Its part of pension relief plan about to be signed by Bush today.

>>> Good for just one year.

>> So the 2009 RMD is susspended?

> Seeing how the penalty for ~not~ taking out the RMD is suspended, that

> pretty much means that there is no tax downside for ~not~ taking the RMD.

> Cash flow needs will prevail here I suspect.

It's not the penalty that is suspended. It is the actual
requirement to take a mandatory distribution that was changed.
2009 is now excluded from the requirement. See below:

(a) In General- Section 401(a)(9) of the Internal Revenue
Code of 1986 (relating to required distributions) is amended by
adding at the end the following new subparagraph:

`(H) TEMPORARY WAIVER OF MINIMUM REQUIRED
DISTRIBUTION-
`(i) IN GENERAL- The requirements of
this paragraph shall not apply for calendar year 2009 to--
`(I) a defined contribution plan
which is described in this subsection or in section 403(a) or 403(b),
`(II) a defined contribution plan
which is an eligible deferred compensation plan described in
section 457(b) but only if such plan is maintained by an employer
described in section 457(e)(1)(A), or
`(III) an individual retirement plan.
`(ii) SPECIAL RULES REGARDING WAIVER
PERIOD- For purposes of this paragraph--
`(I) the required beginning date
with respect to any individual shall be determined without regard
to this subparagraph for purposes of applying this paragraph for
calendar years after 2009, and
`(II) if clause (ii) of
subparagraph (B) applies, the 5-year period described in such
clause shall be determined without regard to calendar year 2009.'.

--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>