Trust and Estate Counsel

Tennessee Estate Planning Law

Insight and commentary on estate planning issues impacting affluent residents of Tennessee

Required distributions from IRAs suspended for 2009

A 2008 law eliminated the requirement for taking a required minimum distribution from your IRA in 2009. The IRS decided to give a reprieve to IRA participants who would like to take advantage of this law by returning a distribution taken earlier this year. You can roll over the distribution to a new IRA until the later of November 30, 2009, or sixty (60) days after the date of the distribution.

Foregoing a distribution in 2009 may not be advantageous. As a general rule, you are merely postponing the tax until a later year. If you believe you will be in a higher tax bracket in later years due to tax law changes, you might pay less tax by taking a distribution in 2009.

Another factor is the ability to convert your IRA to a Roth IRA in 2010. A lot of my clients are planning to make this conversion.

If you anticipate converting your IRA to a Roth IRA in 2010, you should not take a distribution from your IRA in 2009. This will maximize the amount that you can convert to a Roth IRA in 2010.

See the attached guidance from the IRS regarding the ability to roll over a distribution taken earlier this year in order to avoid paying tax for 2009.