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December 24, 2008
Don’t Need IRA Funds in 2009? You Can Leave Them in Place.
Dear Valued Clients,
Most of us have seen the value of our IRAs and employer-sponsored retirement plan accounts dwindle during the recent bear market declines. However, new legislation provides that if you’re already taking Required Minimum Distributions (RMDs) from your retirement accounts – or will soon have to because you are approaching 70½ – you can now choose to keep those assets working for you by not taking your 2009 RMD.
The temporary relief came about because of concerns that seniors were being forced to withdraw funds from their traditional IRAs, Inherited IRAs, SEP IRAs and SIMPLE IRAs, as well as most employer-sponsored retirement plans, including profit sharing and 401(k), 403(b), and 457(b) plans, when the market is at a low point. Such withdrawals remove a larger percentage of savings than when the market is flourishing. The Worker, Retiree and Employer Recovery Act of 2008 allows you to skip these withdrawals in 2009.
By leaving your savings in your retirement plan accounts you not only eliminate the tax due on the distribution, you also give those assets time to recover value and grow in a tax-favored environment. Unless there is further legislation, the mandatory RMD will return in 2010. Some aspects of the law are a little less clear, but I’m actively monitoring developments.
If you would like to discuss skipping your RMD and how doing so might fit into your financial plan, please don’t hesitate to call me at (978) 921-1686.
Sincerely,
Chet Marcus, CFP®
Patti Beckwith, CFP®
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