IRS to Waive Mandatory IRA Distributions for 2009
June 1st, 2009
by Judy Duke-CEO/Founder of JRoss Creative Solutions
Do you know a friend or relative who is at least 70 years old and owns an IRA? You need to make sure they are aware and understand the IRS has waived mandatory distributions for the 2009 calendar year. The IRS rule for IRA distributions has mandated owners of traditional IRA’s to start receiving distributions from their IRA by April 1st of the year following the year in which the IRA owner reaches the age of 70 ½. Every year a different formula determines your mandatory minimum distribution. All distributions are then taxed as income. On December 23, 2008 the President signed into law that for 2009 these mandatory minimum distributions can be waived. The exception would be that if you turned 70½ in 2008, you were still required to take your mandatory distributions by April 1st of this year.
Why did the IRS give seniors this big tax break?
Here's a couple of reasons that may have caused this decision(found on money blog):
- Probably the first reason was the unfairness of making seniors sell stocks or mutual funds at a large loss to raise the cash for their distributions and then also tax them. That would be a real double whammy disaster for seniors!
A second reason was also the political capital that politicians get when they cater to the 85 million people who are senior citizens. Politicians may appear to have the altruistic interests of the seniors at heart, but don’t forget many Wall Street lobbyists and donors were happy with the waiver as well. Selling is never good for Wall Street.
If you know somebody over 70 years of age who is still taking these distributions, be discrete, but ask them if they know about the waiver. They may need the distributions to pay their living expenses. After all, this would not be uncommon. But, maybe they don’t need to be taking the distributions and they can save money in taxes for 2009. As always seeking the advice of a financial consultant is advisable.
Tax Preparation for Individual Tax Returns 2008
Regular Tax Season Services are now closed: E-filing not available for
any services that are offered for late filing with or without extensions.
Even though Tax Preparation Services are seasonal, please feel free to use the links provided to go to the IRS.gov website.
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FYI: Tax Changes for Individuals:
Reported from IRS.gov
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