70 1/2 in 2008 postponed rmd to 4/1/09..do 2009 rules apply?
Both my husband and I were 70 1/2 in 2008 (I was born in June 38, he was born Aug 37). We postponed our first RMD and have planned to take our distribution on or before April 1, 2009. We are wondering if this distribution, since it would be taken in 2009 qualifies for the 2009 exemption for RMDs. I sure hope it does , since our IRAs are now worth less than 40% of what they were worth a year ago.
Permalink Submitted by Paul Sponseller on Thu, 2009-01-29 15:26
The Act does not waive any 2008 RMDs, even for individuals who were eligible and chose to delay taking their 2008 RMD until April 1, 2009 (e.g., retired employees and IRA owners who turned 70½ in 2008). These individuals must still take their full 2008 RMD by April 1, 2009, or they might face a 50% excise tax on the amount not withdrawn. The 2009 RMD waiver under the Act does apply to individuals who may be eligible to postpone taking their 2009 RMD until April 1, 2010 (generally, retired employees and IRA owners who attain age 70½ in 2009). However, the Act does not waive any RMDs for 2010.
Permalink Submitted by Al Fry on Thu, 2009-01-29 19:27
You might consider taking the RMDs in kind, rather than cash. Then just keep them in a taxable account if you expect them to recover. If they are capital assets, you’ll later be paying capital gains rather than ordinary income tax. Of course with the new administration, the rates may narrow in the future. And if you do not cash them in, they will get a cost basis step-up at death (at least under proposed legislation), unlike the IRAs.
Permalink Submitted by Clyde Wolf on Sat, 2009-01-31 01:55
Taking the RMD In-Kind, would still be suject to income tax, 1040 line 15b.
Permalink Submitted by Al Fry on Sat, 2009-01-31 02:08
Right, at their lower value.