As we reported in this blog a few days ago, President Bush signed the "Worker, Retiree and Employer Recovery Act of 2008" on December 23, 2008. The highlight of this legislation was a one year suspension of the requirement to take 2009 required minimum distributions (RMDs) from your IRA. Obviously, many seniors are excited about the option not to take RMDs, but did you know that this legislation also covers the owners of inherited IRAs? Now, owners of inherited IRAs of every age are free to pass on taking their 2009 RMDs as well.
Remember that if you have not yet taken your 2008 RMD, you need to get that distribution paid by the end of this year or you risk incurring a 50% penalty on the amount you should have withdrawn but did not. Many people were waiting to take their 2008 distribution in hopes that 2008 RMDs would be suspended or reduced but that is no longer a possibility.
The one exception to this rule is if you turned 70 1/2 in 2008, you can wait until April 1, 2009 to take your first distribution. However, you are still required to take the 2008 distribution. You can't opt to wait until April 1, 2009 and then skip the 2008 distribution because its payment occurs in 2009.
The author is solely responsible for the content.