IRS Provides 2009 RMD Rollover Relief for IRA, 401(k) Distributions


The IRS on Thursday issued Notice 2009-82 to provide relief for taxpayers who have received required minimum distributions in 2009 from an IRA or similar account. Such taxpayers have until Nov. 30, 2009, (or within 60 days of the distribution, whichever is later) to roll over the distribution into another plan.

 

The Worker, Retiree, and Employer Recovery Act of 2008 waived the minimum distribution requirement for 2009 for IRAs and defined contribution plans (such as 401(k) plans) and allowed certain amounts distributed as 2009 required minimum distributions to be rolled over into an IRA or another retirement plan. Because the Worker, Retiree, and Employer Recovery Act was not enacted until December 2008, many plan administrators did not have time to modify their procedures relating to 2009 required minimum distributions to accommodate the new rules. Also, the IRS reports, plan sponsors have been unsure of the options available to them. Notice 2009-82 assures plan administrators that a plan will not be treated as failing to satisfy the requirement that it be operated in accordance with its terms merely because, during the period Jan. 1, 2009, to Nov. 30, 2009, it:

  1. Did (or did not) make required minimum distributions to participants;
  2. Did (or did not) give beneficiaries the option to receive 2009 required minimum distributions; or
  3. Did (or did not) offer a direct rollover option for 2009 required minimum distributions.

The notice clarifies that, if plan participants received 2009 required minimum distributions, they can roll them over to another plan as long as the rules of IRC § 402(c) are followed. To help participants who may have received distributions already in 2009, but have been unclear on what they could roll over, the notice extends the usual 60-day rollover period so that it ends no earlier than Nov. 30.

 

Caution: The IRS has not suspended the one-rollover-per-year rule of IRC § 408(d)(3). No more than one IRA distribution will be eligible for rollover relief under Notice 2009-82.

 

The notice also contains nine questions and answers regarding the administration of 2009 distributions.

 

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