| Congress Waives Retirement Account
Distribution Requirements for 2009 |
Congress has passed and President Bush signed
legislation that temporarily suspends the penalty for seniors who fail to take
the required minimum distribution from IRA and employer retirement accounts in
2009.
But the penalty freeze, which is part of the
Worker, Retiree, and Employer Recovery Act of 2008, does not affect required
distributions for 2008, which are hitting seniors the hardest, and some contend
that the suspension for 2009 will only benefit more affluent seniors.
Since the idea of retirement accounts is to
encourage taxpayers to save for retirement, there is normally a penalty for
failure to withdraw once the account owner reaches retirement age -- after age
70 1/2. Taxpayers generally must begin taking annual distributions from their
retirement accounts by the April 1 occurring after they reach age 70 1/2 or pay
a whopping 50 percent excise tax on the amount that should have been
distributed but was not. The percentage that must be withdrawn is based on life
expectancy and increases each year. For someone who is 70 1/2 years old, the
required withdrawal would be 3.65 percent of the total retirement account
balance.
But with the stock market plunge, about $2
trillion evaporated from workplace retirement plans between October 2007 and
October 2008, according to the Center for Retirement Research at Boston College.
To prevent seniors from being forced to sell stocks in a down market, Congress
suspended the required minimum distribution rule for 2009.
|
| Updating Your
Estate Plan When Your Finances Change |
In the recent economic downturn, many homes
have lost considerable value and stock portfolios have plummeted. If this is
the case for you, do you need to change your will? What if your income and
assets have increased significantly? If your finances have changed markedly
since you wrote your will, you should check your estate plan to see if you need
to make any changes.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ |
