IRS Issued Notice on Implementation of 2009 RMD Waiver

October 12, 2009

In late September the IRS issued a notice that provides guidance for retirement plan administrators, plan participants and retirees regarding recent legislation affecting required minimum distributions (RMD). It contains relief for both plan sponsors and employees related to the RMD waiver for 2009 from certain retirement plans. The waiver was enacted as part of The Worker, Retiree, and Employer Recovery Act of 2008, which waives required minimum distributions.

Generally, a required minimum distribution is the smallest annual amount that must be withdrawn from an IRA or an employer’s plan beginning with the year the account owner reaches age 70½. The 2008 law waives required minimum distributions for 2009 for IRAs and defined contribution plans (such as 457 and 401(k) plans) and allows certain amounts distributed as 2009 required minimum distributions to be rolled over into an IRA or another retirement plan.

The IRS notice issued in September 2009 provides retirement plan sponsors with sample plan amendments that they can use to implement the waiver. The notice provides that plan sponsors have until Nov. 30, 2009 to operate their plan within the new rules, i.e., operational compliance, and governmental plans administrators have until 2012 to have the actual amendments in place.

The notice also provides greater clarity to plan participants on rollover rules for the amounts that may have been distributed in 2009 prior to making the waiver. The notice clarifies that plan participants who have received an RMD in 2009 can rollover those amounts into the plan or an IRA within 60 days from the time money is withdrawn or from Nov. 30, with no penalty.

More details are available: Notice 2009-82