Required Minimum Distribution Rules Suspended For 2009 For IRAS And Other Defined Contribution Plans

On December 23, 2008, President Bush signed the Worker, Retiree, and Employer Recovery Act of 2008 (H.R. 7327) (the "WRER Act"), which provides that owners and beneficiaries of IRAs and other defined contribution plans who are required to take required minimum distributions ("RMDs") from their plans in tax year 2009, will generally be able to leave their money in their plans (hopefully to grow) without suffering any penalty for failure to withdraw. The normal rules still apply for 2008.

Background

Employer-provided qualified retirement plans and individual retirement accounts and annuities (IRAs) are subject to RMD rules. RMDs generally must begin by April 1 of the calendar year following the calendar year in which the individual reaches age 70 ½. RMDs are generally based on the joint life expectancy of the IRA owner and his beneficiary. For IRAs and defined contribution plans, the RMD for each year is determined by dividing the retirement account balance as of the