Deadline on 2009 required minimum distribution waiver coming up

The Worker, Retiree, and Employer Recovery Act of 2008 waived required minimum distributions (RMDs) for 2009 from certain retirement plans. Congress passed that tax break to help retirees re-build their nest eggs after the stock market collapse in late 2008. The IRS is now helping retirees to realize that goal further by allowing those who received distributions in 2009 to put them back. Nevertheless, the IRS is imposing a strict deadline on this assistance.

Generally, a RMD is the smallest annual amount that must be withdrawn from an IRA or an employer's plan beginning with the year the account owner reaches age 70 and 1/2. The 2008 law waives RMDs for 2009 for IRAs and defined contribution plans (such as 401(k)s) and allows certain amounts distributed as 2009 RMDS to be rolled over into an IRA or another retirement plan.

Individuals who already received a 2009 RMD this year have until the later of Nov. 30, 2009, or 60 days after the date the distribution was received, to roll over the distribution.

One caveat: An individual cannot put back an RMD from an employer-sponsored plan if the plan does not allow 2009 distributions to be skipped. The IRS has provided two sample plan amendments for employers to more easily do just that. Both sample amendments provide that participants and beneficiaries can choose to receive or not to receive 2009 RMDs.

(IR-2009-85)