Comments on: House Votes to Suspend Required Minimum Distribution (RMD) for 2009

By: Frank T.

Frank T. — Thu, 30 Jul 2009 20:45:25 +0000

RE: 31.2, I have seen the paper Peter Ortzog wrote for Ways and means — talk about a travesty — this man now heads OMB, and has committed us to big spending. How can he pretend that $3,000 is what it was in 1978?
RE: 31.3, I already could do this against other income. The RMD is a different issue. Those of us with IRAs that took BIG hits due to the rot created by the bankers and their buddies in govt. should get some tax relief on this. No wonder the social contract is no longer taken seriously.

By: Terry Straehley

Terry Straehley — Thu, 30 Jul 2009 17:38:29 +0000

1. Unlikely
2. It would be nice, but doubtful
3. You can up to $3,000

By: Frank T.

Frank T. — Thu, 30 Jul 2009 16:08:28 +0000

Two questions (really 3):
1. Any chance the RMD for 2010 will be suspended?
2. I have capital losses that, under current rules, may outlive my ability to offset them against ordinary income. To the writer who talks to Ways and Means staff, will they EVER increase this archaic $3,000 limit on writeoffs from capital loss carryforward? How about letting us use them to offset RMD from IRAs?

By: Terry Straehley

Terry Straehley — Fri, 10 Apr 2009 21:37:16 +0000

There are no withdrawal requirements for 2009 if you have been withdrawing up through 2008. Therefore, this should not factor into your Quarterly estimate.

By: E. L. Crosthwait

E. L. Crosthwait — Fri, 10 Apr 2009 21:28:04 +0000

Of course, I withdrew IRA funds in 2008 according to the existing regulations. My question pertains to what I must or should anticipate will be the corresponding withdrawal requiremnents in 2009 so that I may properly forecast quarterly tax payments. It matters a lot if I am to use the age-factor-divisor to compute the RMD during 2009 or the one corresponding to my age in 2008 instead? Perhaps the 2008 law does not address this 2009 question at all…

By: Paul Forshay

Paul Forshay — Fri, 06 Feb 2009 00:28:05 +0000

Guess what? To all of you that are less than 70 1/2, you will have a different attitude about this when you get here! To be “forced” to take the RMD at a time when the market has plunged over 30% is tough to take. You can walk the talk when you are wearing my shoes.

70 and 5/6ths and proud of it!

By: Terry Straehley

Terry Straehley — Fri, 09 Jan 2009 04:16:01 +0000

I just received an email from Senator Feinstein; the bill was signed on 23 December 2008.

By: Leona Frontroth

Leona Frontroth — Thu, 08 Jan 2009 17:46:39 +0000

Has this law been signed by the President? I would like to make my withdrawal plans for 2009.

By: Joe M

Joe M — Thu, 01 Jan 2009 23:42:07 +0000

What I don’t understand is why anyone who is retired would hold a significant position in equities – it is way too risky as we saw in 2008. My 83 year old Dad died in May and had over 70% in equities. I sold everything the day he died and have everything in money market and CD’s for my Mom. Suspending the RMD just encourages risky speculation in the equity markets for those who cannot tolerate the risk.

By: Scott

Scott — Tue, 23 Dec 2008 22:35:53 +0000

Three questions:
1. Is the suspension for ‘09 RMDs available to taxpayers who became seventy and a half in ‘08 and opted to forego the RMD for ‘08, expecting to have to take an extra RMD in ‘09?

2. Will their 2010 now include the extra RMD?
3. If so, will these taxpayers pay more tax in 2010 (perhaps they will be in higher tax bracket, or tax rates are likely to increase) than if they distribute in ‘09 and 2010?

By: Jo Coke

Jo Coke — Wed, 17 Dec 2008 21:11:41 +0000

Note that one does not have to transfer cash; it can be stock. I am moving shares from an IRA account to a taxable account held at the same institution. The dollar amount I must transfer doesn’t change, but at least I can hang on to the asset. My CPA concurs that this is allowed.

By: Lori

Lori — Wed, 17 Dec 2008 21:10:05 +0000

Peter:
I got the info from Collin W Fritz and Associates, Ltd – The Pension Specialists.

By: Peter North

Peter North — Wed, 17 Dec 2008 20:56:07 +0000

Not sure where you read that they would be increasing the RMD age. I might find some new reading material if you believe that one. The government needs the RMD’s to help pay their bills. The deficit is likely to break a trillion this year and next. The days of 2% of the population picking up 50% of the tax tab are over. Take away capital gains from tax revenue and cut short term income of the the well off and you create a mammoth hole. Frankly, I’m surprised that they passed this for 2009 it makes no sense economically.

I think too many people are looking at this the wrong way. The government allows you to earn money and postpone paying the taxes you owe. Not sure why everyone thinks they should be entitled to postpone it more. Yes, the market went down but it will likely still be relatively low at the end of this month. For some people it might be an ideal time to take the money and put in a taxable account when the market is still relatively low. Some of you may pay lower taxes over the long run that way.

By: Lori

Lori — Wed, 17 Dec 2008 20:18:16 +0000

I read somewhere that they were going to change the RMD age to 75. Is this true and if so, how does that affect those people that are between 70 and 75? Would they still be required to take their RMD anyway?

By: jitendra r modi

jitendra r modi — Wed, 17 Dec 2008 18:43:53 +0000

The provision of the bill regarding the minimum required distribution for 2009 is a welcome news but for MRD in respect of 2008, it comes too late. Hopefully, Treasury will be able to issue some instructions to IRS to provide some sort of relief to those who have already taken the MRD for 2008. Frankly, the Administration, Congresss and Federal Reserve have handled response to the entire financial crisis (not only reflief for the RMD) very sloppily. A lot of turbulence could have been avoided (or at least mitigated) by concerted action earlier on in the year.

By: howard garber

howard garber — Tue, 16 Dec 2008 20:04:05 +0000

Final word from Treasury for 2008 with RMD
“We can’t do anything for 08″.We don’t have ability. Just received call back from legislative section 3PM December 16,2008

By: Ruth

Ruth — Tue, 16 Dec 2008 16:37:28 +0000

1. We are seniors with huge losses but we must sell, thus depleting assets which may recover later. How is this beneficial for a senior? I’m beginning to think our grandparents’ mattress wasn’t such a bad idea.

2. Since when is it greedy to take your MDR later in the year? Some of you are not very nice people.

By: Bill

Bill — Tue, 16 Dec 2008 15:01:34 +0000

What a lame excuse to be fair to those already having taken their RMDs! Since when is Congress concerned about fair other than bailing out the lobbyists & the companies that they represent that give big bucks. Some taxpayers actually do wait until the end of the year. Now their RMD is calculated on a balance that was at least 30% or higher at 2007. Many will probably have to sell postions, like mutual fund managers, in good investments merely because cash is required to be paid out. Once again, the average American will bear the burden of irresponsibility & lack of vision by those who have positions of trust in our society.

By: Terry Straehley

Terry Straehley — Tue, 16 Dec 2008 04:16:36 +0000

@Howard
The Senate concurred with HR 7327 on Friday (see http://finance.senate.gov/pres.....21108b.pdf ). This went through so automatically that there is little doubt in my mind that the President will sign it. The House in writing HR 7327 apparently did not want to discriminate against people who had already taken all or part of their RMD for 2008, and it appears made a specific decision to only waive 2009. I don’t think that the IRS can waive 2008 on their own, and I don’t know how they could make people whole if they had already taken it, unless they let them put it back in.

By: Howard Garber

Howard Garber — Tue, 16 Dec 2008 03:45:41 +0000

HI
I talked with legislative staff for the House Ways and Means Committee this AM. I was told that they were waiting to hear from Treasury Dept. which had notified them that the IRS was possibly going to waive 2008 RMD. I was told that the IRS was suggesting that it would make persons who had already taken the distribution whole again.
I will be calling again tomorrow since I was told they were waiting to hear from Treasury before they called anyone back to confirm.
The other part of the issue is, if the IRS does not do anything, then HR 7327 won’t mean much unless the Senate ?concurs and the President signs it.

Could you check as well…December 31 is getting very close and some of us have also had checks drawn from taxes by IRA Trustee to pay charitable contributions.

Howard Garber

By: Terry Straehley

Terry Straehley — Mon, 15 Dec 2008 04:34:03 +0000

@Tim
It’s clear from title that the suspension is for 2009, not 2008. Granted that a suspension for 2008 would be more useful to those of us who had more to distribute in 2008, Congress felt that it would disadvantage people who take monthly distributions as opposed to lump distributions. This being the case I am making a lot of 2009 Charitable distributions with in 2008 with my 2008 RMD, so I don’t have to touch my IRA in 2009. When Congress sends lemons, you need to know how to make lemonade.

By: Tim

Tim — Sun, 14 Dec 2008 21:54:41 +0000

@Terry: sorry, RMD suspension isn’t even for 2008, it is for 2009, so as I said before, it was a useless gesture on Congress’ part.

By: Peter North

Peter North — Sun, 14 Dec 2008 16:58:33 +0000

The RMD provision does not seem to make any sense from an economic standpoint. The only people that benefit are those that can afford not to take the RMD. So they pay less taxes and potentially less money gets funnelled back into the economy. This is a feel good measure that makes me wonder if congress has a clue.

By: Terry Straehley

Terry Straehley — Sat, 13 Dec 2008 23:41:40 +0000

As an amendment to my previous comment, HR 7327 was passed by a voice vote in the Senate yesterday, so it can be assumed that it will become law.

By: Hans Zimmermann

Hans Zimmermann — Sat, 13 Dec 2008 22:16:44 +0000

A previous comment has it correct, we cannot constantly change the rules just because the market dropped in value. Those individuals who took their redemptions at the beginning of the year and or
on a monthly basis either did well or not so bad.
Lesson learned, don’t be greedy and think the market is a one way high and higher, there will be bumps in the road. Therefore, if you spread your RMD over the full year and or reinvest it in the market, it should even out.

By: Terry Straehley

Terry Straehley — Sat, 13 Dec 2008 19:13:40 +0000

@Tim Since the input to your IRA, etc wasn’t taxed in the first place, the loss in value this year is not a loss for tax purposes. As mentioned above, my IRA is down almost 50% this year from 12/31/07 (luckily, I took part of my RMD earler this year), but taking the rest at this time will deplete my IRA unnecessarily. Suspending it this year, or changing the value on which it is figured to a more current one would have been more helpful IMHO. Of course this apparently hasn’t been passed by the Senate or signed into law, so even this may not happen.

By: DON

DON — Fri, 12 Dec 2008 20:39:49 +0000

I HAVE BEEN HOLDING OFF RMD SO SOME BENEFIT MIGHT OCCUR.
AT 79 I AM REQUIRED TO TAKE 5% — BUT BECAUSE MY VALUE IS DOWN 50% IT COMES TO 10% OF MY CURRENT IRA.
A LOWER TAX RATE FOR THE WITHDRAWAL AMOUNT WOULD HAVE BEEN HELPFUL OR NO WITHDRAWAL PERMITTED.
THEY SAY IRS CAN STILL CHANGE DATE VALUE IS CALCULATED–I’M HOPING FOR THAT AT THIS POINT.

By: Tom Kueht

Tom Kueht — Fri, 12 Dec 2008 19:46:51 +0000

The RMD for 2008 is based on the value of the your IRA as of 12/31/2007, where generally values where higher. The 2009 RMD will be based on the value as of 12/31/2008, and it appears that the values will be much lower.(10%-20%-30%-40%-50%) This part of the bill is once again short sighted in its suggested benefit to the retirees/tax payers.

By: Tim

Tim — Fri, 12 Dec 2008 12:12:26 +0000

@MB, it is useless and shifts liability to taxpayer. useless because we should be forcing companies to meet a 2% target difference. useless, because now instead of balancing their books for the year, we are letting them balance books over a few years. it’s capitalization on the books, not in real terms. i really hate fuzzy and creative accounting math. if companies can’t balance their books on a bad year, then they ought not be in business. sorry for the employees, but that is life. the accrual provision is useless for a few reasons because ultimately in the end it doesn’t matter. sorry, just don’t get the silly math going on here.

@nickel: although i concede that there are some that do not need to withdraw at 70.5, most do. Those who don’t need to have enough money already, so guess what, tough love because that is the risk you have in investing in retirement accts in the market. we can’t keep adjusting the goal posts because of inconvenient market timing. the plan surely doesn’t help most of the people who need to tap the funds. besides, if you have income outside the retirement acct, use the loss to offset your income.

By: nickel

nickel — Fri, 12 Dec 2008 04:32:10 +0000

Actually, my parents are only withdrawing because they have to. They’re living just fine on my dad’s pension, so they wouldn’t be pulling out money (especially not this year) unless they were forced to do so. And MB is correct… This bill covers much more than the RMD.

By: MB

MB — Fri, 12 Dec 2008 04:25:46 +0000

This bill actually has a much larger impact than just RMDs. In fact, I would say that RMDs are a minor portion of the bill.

This bill will allow plan sponsors (companies) some much needed relief from the funding requirements set forth in the PPA. In particular, this bill allows plan sponsors to smooth their assets over 2 years instead of merely recognizing the current market value of their assets, which of course are in the tank. In short, the PPA requires plan sponsors to eventually get to a point where the assets in the pension trust are equivalent to the future liabilities of the plan. Therefore, if assets decrease substantially, as they have this year, then the company is responsible for making a (large) cash contribution to account for the gap in assets and liabilities. Smoothing (or averaging) the assets decreases this cash contribution, providing much needed capital for companies. Hopefully this will save some jobs.

The change in the funding target percentage has similar impacts.

I think the redeeming fact of this bill is that it provides relief for companies, yet it does not jeopardize the original goal of the Pension Protection Act (PPA) – to ensure the future solvency of pension plans.

To adress Tim’s point that this is a “useless bill” – under the current rule if you work for a company that has a funding target (i.e., plan assets divided by plan liabilities) under 60% your pension benefit would be FROZEN (i.e., you get nothing, zilch, nada) until the company restored the plan to a given funding level. Hence, you have already taken a pounding in your 401(k) and now your pension accruals would cease. The new bill would allow companies (in some cases) to continue your pension accruals.

By: Tim

Tim — Thu, 11 Dec 2008 21:40:44 +0000

what a useless bill. if you are 70.5 all but maybe .005% are already withdrawing anyways. can’t these guys do something more important like pass legislation on immigration, health care, etc.?