What Is RMD Relief?
RMD stands for required minimum distribution and applies to certain retirement accounts. If you fail to take an RMD, you face penalties of up to 50 percent of the amount you failed to withdraw.
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Who Must Take an RMD?
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If you are older than age 70-1/2 and have money in a traditional IRA, 401(k) or 403(b) plan, you are usually obligated to withdraw a certain amount based on the IRS life expectancy tables and the value of your accounts.
Function
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The Worker, Retiree and Employer Recovery Act of 2008 made all RMDs optional for 2009 because of the significant losses suffered by most stock portfolios.
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Significance
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The Worker, Retiree and Employer Recovery Act of 2008 allows people to leave the money in their tax-advantaged retirement account so the account can recover some if its value before the money must be withdrawn.
Misconceptions
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The Worker, Retiree and Employer Recovery Act of 2008 does not waive RMD requirements for money needed to be taken out for 2008 RMDs.
Potential
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Some lobbyists are pushing for the RMD relief to be extended to 2010, but according to Fairmark.com, you cannot count on this legislation being passed.
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