RMD 2009 Relief, FAQ
Questions and Answers on Temporary RMD Relief
Q1. If I don’t take a 2009 RMD, won’t I be required to pay a tax penalty?
No. Under the Act, there is no RMD required for 2009, and no tax penalty will be assessed if you do not take your RMD. In a normal year, the Tax Code assesses a 50% excise tax on any required distribution that fails to be distributed. But 2009 will not be a normal year. No excise taxes will apply because there will be no required distributions in 2009.
Q2. I’ve been taking RMDs for years and I’ve grown to depend on them as a source of retirement income. Can I still take the distribution that I had planned on?
Absolutely. Your access to your account hasn’t changed. The only thing that’s changed is that you aren’t required to take a 2009 minimum distribution. If you would like to take a distribution anyway, you can certainly do that.
Q3. I currently have a systematic withdrawal set up on my contract. Will I still receive my payments?
A systematic withdrawal is an automatic withdrawal that you take monthly, quarterly or annually. If there is currently a systematic RMD withdrawal set up on your contract, and you wish to keep it, there is nothing you need to do. The payment you receive will be based on the RMD calculation. However, you may elect to receive a systematic withdrawal in any amount that you request.
Q3a. If I stop my payments, what will happen in 2010?
Starting in 2010, your systematic payments will resume in accordance with your original instructions.
Q3b. How do I stop my payments?
If you wish to stop receiving the payments, please contact us.
Q4. What period does the relief apply to?
The relief applies to RMDs due to be paid out to satisfy the 2009 RMD requirement. Any individual who attained age 70 ½ in 2008 and opted to defer his or her 2008 payment up to April 1, 2009, would still need to take a 2008 payment between now and April 1, 2009.
Q5. Which plans does this relief apply to?
The waiver applies to the following plans: IRA, 401(a), 401(k), 403(a), 403(b) and governmental 457(b) plans.
Q6. What is the relief being provided with regard to RMD payments for the 2009 calendar year?
Relief is being provided in the following ways:
a) No RMD is required for 2009.
b) Any individual who attains age 70 ½ in 2009 will not be required to take a first RMD by April 1, 2010, but the distribution for the 2010 calendar year must be taken by December 31, 2010.
c) If the individual takes a partial withdrawal, the distribution is not subject to the mandatory 20% withholding that is typically required of RMDs.
d) For beneficiaries under the 5-year rule, the 5-year deferral period is extended by one year (e.g., if an individual died in 2007, the period would end in 2013 instead of 2012).
Q7. What about the RMD I just took for 2008? Am I going to receive any relief for that?
This relief applies only to 2009.
Q8. Whom do I contact for any questions or additional information?
Contact us at, 919-465-0300
This information is provided as general guidance. It is not intended to be legal or tax advice. Any
taxpayer should seek advice based on the taxpayer's particular circumstances from an independent tax advisor.
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