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Tax relief passed for seniors

Posted by Jamie Downey December 24, 2008 08:45 AM

In the December 12, 2008 Boston Globe business section there was a report on a bill in Congress amending the Pension Plan Act of 2006, which included an amendment to change the minimum required distribution (MRD) laws for individuals over the age of 70 1/2. Was this bill passed and the MRD altered?

On December 23, 2008 President Bush signed into law the "Worker, Retiree, and Employer Recovery Act of 2008". This bill waives the minimum required distribution from an Individual Retirement Account (IRA) or defined contribution plan. This waiver is temporary and is only effective for calendar year 2009.

The tax laws require individuals who have reached age 70½ to take an annual minimum amount from their 401(k) plan or IRA. Failure to comply with this law subjects the individual to a 50 percent excise tax penalty on the amount that should have been withdrawn. As an early Christmas present to seniors, the President and Congress have waived these distribution requirements and the excise tax for 2009.

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Local finance professionals share insights and advice on issues such as budgeting, managing debt, and retirement planning.
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About the contributors

Jill Boynton is co-founder of Cornerstone Financial Planning in Newington, N.H. Along with traditional financial planning services, Boynton provides analysis specifically for divorce.
Andrew Chan is the founder of Integrative Financial Advisors in Framingham. He provides comprehensive financial planning advice and investment management services. He has been an adviser for over 12 years and works with clients to integrate all aspects of their finances including investments, retirement, education funding, and tax planning.
Cheryl Costa is a managing director at AFW Wealth Advisors, which has offices in Natick and Purchase, N.Y. She advises clients on investing, education funding, and estate planning. She holds a master’s in business administration from Boston University.
Jamie Downey has been an accountant for more than 14 years. He's a partner at Downey & Co. in Braintree. Prior to joining the firm, he served as a manager in the audit department of accounting firm KPMG.

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