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The Trusted Expert Network recently posted an important blog about the new tax bill, signed in December ’08, which waived the 2009 minimum withdrawal requirement on IRAs and other retirement plans for those who have reached age 70 1/2 or older.

Since then, we have received numerous questions asking for clarification. For example, many of you wanted to know if this new ruling had a make-up requirement.  In other words, if you are 70 ½ or older and you choose not to take a withdrawal in 2009, will you have to make up for it in subsequent years?

The answer is no. You will not have to double up on any subsequent withdrawals if you decide not to take a withdrawal in 2009, nor will  there be any penalties for missing this year.

Here are some other FAQ’s:

Q. How do I calculate what I take out in 2010? Do I go back and take what I would have withdrawn in 2009?

A. No. The way that the minimum withdrawal requirement will work in 2010 is that you will use the age you are in 2010 according to the IRS table, along with the balance of your account on Dec. 31 2009.

Q.  If I turned 70 ½  in 2008 and deferred my first year required distribution, do I still have to take a withdrawal in 2009?

A. Yes, this would be the only instance where you cannot defer your 2009 withdrawal because you already took the deferral in 2008. The law requires that you take your first distribution by April 1, 2009.

Q. Do these rules also apply if I inherited an IRA from someone who was age 70 ½   or older upon their death?

A.  Yes, you would also be eligible for this new 2009 tax break and would be allowed to spread the subsequent withdrawals over six years instead of five because you are skipping this one year.

Q. Does this withdrawal plan also apply to a distribution from a 403b, 401k or other retirement plan?

A. Yes.

With the start of a new administration and a changing of the guard in every governmental agency, all Americans are going to experience a major learning curve. There will new leadership, new laws and new implications of both..

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Tags: 403(b), ira, lee rosenberg, seniors, tax laws, tax tips

About the Author: Lee Rosenberg is the Co-founder of ARS Financial Services, Inc. As a Certified Financial Planner with more than 34 years of solid financial expertise. Lee is a registered representative of Cadaret, Grant & Co., Inc. He was also named one of the top 25 Independent Financial Advisers in the US by Rep magazine.

This entry was posted on Tuesday, March 17th, 2009 at 10:00 am and is filed under Taxes. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.