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Required distribution relief: thanks for not much.

December 12, 2008

Congress has passed a bill (HR 7327) that eases the required minimum distribution amounts from IRAs and defined contribution plans -- but only for 2009. No relief is yet in place for 2008. The President is expected to sign the bill.

There have been calls for relief for the RMD rules for 2008 because the baseline for 2008 distributions is December 31, 2007 plan asset values. The 2008 stock market debacle means that a distribution based on 2007 values is a lot larger than one based on current values would be - so the plan asset base gets depleted.

While Treasury could waive the RMD rules for 2008, they haven't so far. It's hard to see where the waiver for 2009 distributions makes much sense, unless the Congresscritters are expecting 2009 stock marke results to be as bad as 2008. If that happens, screw changing the RMD rules; they need to allow plans to invest their assets in canned goods, guns and ammo.

Links:

HR. 7347
Joint Committee Explanation

The Tax Prof has a roundup.

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