Whether you are enjoying
your retirement or still saving for one, two changes in
the law may be worth your consideration.
Skip or Undo
your Retirement Plan Distributions in 2009:
If you are over age 70½ or are a beneficiary
of an inherited IRA or qualified retirement plan, you
may elect not to receive your “required minimum distribution”
for 2009 from your qualified retirement plan or IRA.
In response to the plunging values of retirement accounts
in 2008, Congress has provided a 1 year suspension on
these mandatory payouts so that retirees may benefit
from any market recovery and not be forced to cash-in
assets at a time when values were low. Minimum distributions
will again be required in 2010.
For those who have already
taken your required minimum distribution in 2009, there
is a brief opportunity available for you to “undo” your
2009 distribution. You may roll the money back into
your IRA or retirement account by November 30, 2009,
if you received your distribution before October 1,
or, if the distribution was taken after September 30,
then no later than 60 days after the distribution. If
your distribution was made in more than one installment
from an IRA, however, only one installment may be returned
to the IRA.
Convert to
a Roth IRA in 2010:
The restriction on conversions to a Roth IRA for taxpayers
earning over $100,000 will be eliminated in 2010. Beginning
next year, all owners of traditional IRAs may convert
the accounts into Roth IRAs, which will permit the account
to be withdrawn during retirement tax-free. However,
federal income tax for the conversion will be due on
the value of the rollovers relating to the pre-tax contributions
and the investment growth of the traditional IRA. For
rollovers made in 2010 only, the conversion amount can
be split and added to your taxable income over 2 years
instead of one. While the IRS will get your tax payments
now, all of the present value and future growth in the
Roth IRA will escape taxation.
