My blog has moved!

You should be automatically redirected in 6 seconds. If not, visit the page Planner's Thoughts at
http://StrattonPlanning.com
and update your bookmarks.

Tuesday, December 23, 2008

Treasury to Seniors with IRAs: Drop Dead

In an earlier post, I noted that Congress has passed relief from the Required Minimum Distribution (RMD) requirement for Traditional IRAs for the 2009 tax year.

But I have a close relative who is howling, because he is now required to take RMDs for 2008 with his portfolio at firesale prices. His stock and fund holdings are (like almost everyone else) in the proverbial toilet -- so he's taking a bath. Unfortunately for him, and all other Traditional IRA owners over 70 1/2 years of age, the Treasury Department will not give relief for this tax year. Relief will only occur next year.

In a letter to the House Education and Labor Committee, the Treasury Department reasons:

The Treasury Department and the Internal Revenue Service have determined that any further change to the required minimum distribution rules should not be undertaken. The scope of Treasury's ability to make administrative changes has constraints. Thus, any steps Treasury could take would be substantially more limited than the relief enacted by Congress and could not be made available uniformly to all individuals subject to required minimum distributions. In addition, implementation of such changes would be complicated and confusing for individuals and plan sponsors. Thus, all individuals who are subject to required minimum distributions for 2008 should take their distribution under the existing rules and, as a result of relief provided by Congress, they will be entitled to a complete waiver of the requirement to take any distributions for 2009.

No comments: