n-09-09.pdf

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Part III. Administrative, Procedural and Miscellaneous

Required Minimum Distributions for 2009

Notice 2009-9

PURPOSE

This notice provides guidance to financial institutions on reporting required
minimum distributions for 2009 after enactment of the Worker, Retiree, and
Employer Recovery Act of 2008, P.L. 110-458.

BACKGROUND

On December 23, 2008, the President signed the Worker, Retiree, and
Employer Recovery Act of 2008 (the Act) into law. Section 201 of the Act waives
any required minimum distributions (RMDs) for 2009 from retirement plans that
hold each participant’s benefit in an individual account, such as § 401(k) plans
and § 403(b) plans, and certain § 457(b) plans. The Act also waives any RMD
for 2009 from an Individual Retirement Arrangement (IRA). This means that
most participants and beneficiaries otherwise required to take minimum
distributions from these types of accounts are not required to withdraw any
amount in 2009. If they do make a withdrawal in 2009 (that is not an RMD for
2008), they might be able to roll over the withdrawn amount into other eligible
retirement plans. Of course, they must still include any previously untaxed
portion of the withdrawal that they do not roll over in their gross income. See
Individual Retirement Arrangements (IRAs), Publication 590, and Pension and
Annuity Income, Publication 575, for additional information on rollovers and on
calculating the taxable portion of a distribution.

The Act does not waive any 2008 RMDs, even for individuals who were
eligible and chose to delay taking their 2008 RMD until April 1, 2009 (e.g., retired
employees and IRA owners who turned 70½ in 2008). These individuals must
still take their full 2008 RMD by April 1, 2009. The 2009 RMD waiver under the
Act does apply to individuals who may be eligible to postpone taking their 2009
RMD until April 1, 2010 (generally, retired employees and IRA owners who attain
age 70½ in 2009). However, the Act does not waive any RMDs for 2010.

If a beneficiary is receiving distributions over a 5-year period, he or she
can now waive the distribution for 2009, effectively taking distributions over a 6-
year rather than a 5-year period.

IRA REPORTING

Issuers of the 2008 Form 5498, IRA Contribution Information, should not
put a check in Box 11. However, in recognition of the short amount of time to
make programming changes, if a financial institution issues a 2008 Form 5498
with a check in Box 11, the IRS will not consider such form issued incorrectly
solely because of the check in Box 11, provided the IRA owner is notified by the
financial institution no later than March 31, 2009, that no RMD is required for
2009.

In addition, the RMD information required under Notice 2002-27, 2002-18
I.R.B. 814, need not be sent to IRA owners for 2009. If a financial institution
sends a separate RMD statement to an IRA owner, either initially or in response
to the owner’s request for the financial institution to calculate the RMD for 2009,
the financial institution must show the RMD for 2009 as zero (0). Alternatively,
the financial institution may send the IRA owner a statement showing the RMD
that would have been required but for the waiver of RMDs for 2009, along with an
explanation of the waiver for 2009.

The IRS encourages all financial institutions to inform IRA owners who
delayed taking their 2008 RMD until April 1, 2009, that they are still required to
take that distribution.

EFFECT ON OTHER DOCUMENTS

Notice 2002-27 is modified.

DRAFTING INFORMATION

The principal author of this notice is Anita Bower of the Employee Plans,
Tax Exempt and Government Entities Division. Questions regarding this notice
may be sent via e-mail to RetirementPlanQuestions@irs.gov.