TIME TO REVERSE REQUIRED MINIMUM DISTRIBUTIONS FOR 2009
Posted by Thomas J. Bogar on October 27, 2009
A limited planning opportunity now exists for those with tax-deferred retirement accounts. Last December, Congress suspended the required minimum distribution (RMD) rules for taking distributions from traditional tax-deferred accounts. But to take advantage for this limited stay, individuals 70 ½ and older must do so before November 30th of 2009.
Usually, people age 70 ½ and older must take annual RMD based on their life expectancies. For some, RMD is not a primary concern; but for others, preservation of wealth and minimizing income taxes is and they may be most interested in this one-time offer.
So what about those people who took unwanted RMD in 2009 because they were unaware of Congress’ limited offer? There is hope. But if interested, you need to act fast. The IRS issued a ruling released September 24th allowing people who took unwanted RMD in 2009 to return the money back and avoid paying income taxes on the withdrawals from the tax-deferred account. Act now, because this offer expires November 30, 2009.
In addition to the limited time for reversing payments, there are other potential complications. Most people take periodic RMD. In other words, they take monthly withdrawals from their accounts. But many plans will permit only one withdrawal to be returned to the account, leaving the account holder with an unwanted RMD and a tax bill.
There are options, but before doing so, you should seek professional tax advise.
