Bad News For Seniors: No IRA Help For 2008 -Janet Novack 12.18.08, 5:30 PM ET -The Treasury has decided against granting any relief to retirees who were hoping to take smaller 2008 distributions from their depleted individual retirement accounts.
Last week, Congress passed a bill suspending--for 2009--rules that force IRA owners over 70 and a half years old, as well as those who have inherited IRAs, to take "required minimum distributions" (RMDs) from these accounts annually. The Treasury Department, meanwhile, had been considering easing the pain for 2008 too.
Normally, the RMD is calculated based on an IRA owner's age (older folks must take out more) and his or her IRA balance on Dec. 31 of the previous year. Outside tax lawyers believed the Treasury had the authority to allow 2008 distributions to be based on some date in late 2008 after the market had tanked. That would have led to smaller required 2008 distributions.
Treasury and the Internal Revenue Service have decided, however, that since Congress has now acted, they will not allow this, according to a letter being sent to several senators and congressmen who had requested help from Treasury.
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