Tax Alert: 2009 Required Minimum Distribution (RMD) Waiver Creates Unique Tax Saving Opportunity
11/20/2009
Time is running out to take advantage of relaxed rollover rules for individuals who took 2009 required minimum distributions (RMDs) even though they didn’t have to. In many cases, the situation can be remedied by making a rollover by November 30, even though that is beyond the usual 60-day rollover period.
This unusual tax break involves RMDs that would, under normal circumstances, have been required to be paid in 2009. The RMDs were suspended by Federal legislation passed earlier this year, but may have been distributed anyway. In general, retirement plan or IRA withdrawals that were made despite the 2009 RMD waiver won’t face tax if rolled over to a retirement plan within 60 days. IRS guidance issued last September includes an extension of the 60-day rollover period to November 30, 2009, for certain distributions. However, no more than one distribution from an IRA may be rolled over. The rollover relief gives older taxpayers an unusual opportunity to correct an inadvertent mistake that otherwise would unnecessarily increase their taxable income for 2009. It also gives some individuals a “retroactive” chance to reduce their tax bill if their financial circumstances have improved during the course of 2009.
For more information on this and other tax issues, please contact your J.H. Cohn advisor or Ira Herman, CPA, J.H. Cohn partner and the Firm's Trust and Estate Practice Director, via email or at 973-618-6245.
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