The Internal Revenue Service and the Treasury Department have decided against changing a rule that requires retirees to withdraw a minimum distribution from their retirement savings accounts by the end of 2008.
Congress decided earlier this month to eliminate the requirement for 2009 after hearing complaints from many retirees that the minimum distribution requirement forced seniors into withdrawing money from their severely depleted individual retirement accounts and 401(k) accounts (see Congress Kills Minimum Distributions for 2009). Under the rules, retirees over the age of 70-1/2 are required to take a minimum distribution by Dec. 31 every year or pay half of the minimum distribution in taxes.
"Any steps Treasury could take would be substantially more limited than the relief enacted by Congress and could not be made available uniformly to all individuals subject to required minimum distributions," wrote Kevin Fromer, the Treasury's assistant secretary for legislative affairs, in a letter to Congress. "In addition, implementation of such changes would be complicated and confusing for individuals and plan sponsors. Thus, all individuals who are subject to required minimum distributions for 2008 should take their distribution under the existing rules and, as a result of relief provided by Congress, they will be entitled to a complete waiver of the requirement to take any distributions for 2009."
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