On Thursday, Congress passed a waiver of the minimum distribution rule for 2009, but not for 2008, for employer-provided qualified retirement plans and individual retirement accounts and annuities in H.R. 7327, the Worker, Retiree, and Employer Recovery Act of 2008. President Bush is expected to quickly sign it.The Treasury Department is studying whether to provide relief with regard to 2008 minimum distributions.
The 2009 minimum distribution relief applies to lifetime distributions to employees and IRA owners and after-death distributions to beneficiaries, and is effective for calendar years beginning after Dec. 31, 2008. However, it doesn't apply to any required minimum distribution for 2008 permitted to be made in 2009 by reason of an individual's required beginning date being April 1, 2009.
The bill also makes a number or technical corrections to the Pension Protection Act of 2006. Among the most significant are:
-- A technical correction provision providing that a rollover from a Roth designated account in a tax-qualified retirement plan or tax-sheltered annuity to a Roth IRA isn't subject to the gross income inclusion and adjusted gross income conditions.
-- Effective for plan years beginning after Dec. 31, 2009, rollovers by nonspouse beneficiaries are generally subject to the same rules as other eligible rollovers.
-- The transition rule for minimum funding rules for single-employer defined-benefit plans is extended to plans beginning after 2008, even if, in each preceding plan year after 2007, the plan's shortfall amortization base was not zero. Other changes in response to the economic crisis include temporary modification of the application of limitation on benefit accruals, a temporary delay of designation of multi-employer plans in endangered or critical status, and a temporary extension of the funding improvement and rehabilitation periods for multi-employer pension plans in critical and endangered status for 2008 or 2009.
-- The civil penalty for failure to timely file a partnership return is increased to $89 from $85 per partner for each month (or fraction of a month) that the failure continues, up to a maximum of 12 months for returns required to be filed after Dec. 31, 2008. A $4 increase to $89 per return was also made for the penalty for failure to file S corporation returns
The Technical Explanation of H.R. 7327 prepared by the staff of the Joint Committee on Taxation can be found here.
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