Suspension of RMD for 2009

If a current bill is signed by the President, people over 70.5 will not have to take RMDs in 2009. How will this impact your planning for clients? For some clients, I’d have to weigh selling their stocks in non-IRA accounts rather than use IRA funds which would be taxed (the stocks have gains, but I’ve taken so many losses this year, it wouldn’t matter). What are other people thinking?



Early 2009 may be a good time for a Roth conversion. The market is down and a conversion in 2009 will not result in an RMD that must be taken first in order to do the conversion early in the year. In addition, there will be no RMD to contribute to increasing the marginal tax rate, leaving more room to do a larger conversion without breaching the current bracket.



It appears that this suspension applies to beneficiaries withdrawing from inherited IRAs. Is that correct?



Yes. Age 70.5 is not a requirement for the RMD suspension.



Has this bill been passed?

Thank you.



The bill has been passed by the House and Senate and awaits the President’s signature.



Will those with an Inherited IRA be able to convert it to a Roth?

Thank you.



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