Helping participants deal with the RMD
On December 23, 2008, President George Bush signed the Worker, Retiree, and Employer Recovery Act of 2008 (H.R. 7327), which, among other things, provides that owners and beneficiaries of IRAs (but not Roth IRAs) and other defined contribution plans who are required to take required minimum distributions (RMDs) from their plans in tax year 2009 generally will be able to leave their money in their plans without suffering any penalty for failure to withdraw (for more information, see IRS Notice 2009-09 at www.irs.gov/pub/irs-drop/n-09-09.pdf).
Ahead of that legislation, there had been much discussion about some relief from the RMD requirements this year—however, the normal rules still apply for 2008—and participants, who are understandably confused about how to apply the RMD rules under the best of circumstances, are perhaps more confused than ever.
This month's KnowHow outlines the basic questions about what the RMD is, how it is calculated, and when it has to be taken, as well as some helpful links for more information (including a calculator).
As always, I hope you will find this information useful in communicating with your participants—and look forward to your comments. —Nevin E. Adams, JD