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November 16, 2011
Waiver Of Required Distributions From Retirement Plans For 2009

Once you reach age 70½, you are required to take annual distributions from your 401(k), 403(b), IRA or other qualified retirement plan. You can defer the first distribution until April 1st of the following calendar year, but then you have to take two distributions in that calendar year – your regular distribution for that year and the deferred distribution from the prior year.

In order to avoid further depleting retirement accounts that have suffered significant investment losses, the federal government has waived required distributions for 2009.

Your plan administrator or IRA custodian should inform you that there is no required distribution from these accounts in 2009. This is part of the Worker, Retiree, and Employer Recovery Act of 2008. If you have already scheduled your 2009 distribution, you should contact your account custodian to see if it can be stopped. If you receive a distribution this year, you may be eligible to make a qualified rollover of those funds.

However, if you turned 70½ in 2008 and deferred your first distribution until 2009, you are still required to take that distribution by April 1, 2009. Because that initial distribution is considered a 2008 distribution, the 2009 relief does not apply. If you turn 70½ in 2009, you will not be required to take a distribution this year. In 2010, you will be required to take one distribution (the regular 2010 distribution) by the end of the year.

If you are a beneficiary of an inherited IRA and have elected to take distributions over a five year term, the 2009 waiver will allow you to skip this year and extend your term by one additional year.

If you have any questions or need additional information, please don’t hesitate to contact a member of Eisenhower’s Estate Planning & Probate Group for assistance.

Disclaimer

This advisory is a publication of Eisenhower Carlson PLLC. Our purpose in publishing this advisory is to inform our clients and friends of recent legal developments. It is not intended, nor should it be used, as a substitute for specific legal advice as legal counsel may only be given in response to inquiries regarding particular situations.

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