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

By Alistair M. Nevius, J.D.

On September 24, the IRS issued Notice 2009-82 to provide relief for taxpayers who have received required minimum distributions (RMDs) in 2009 from an IRA or similar account. Such taxpayers have until November 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, P.L. 110-458, 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 RMDs to be rolled over into an IRA or another retirement plan. Because this provision was not enacted until December 2008, many plan administrators did not have time to modify their procedures relating to 2009 RMDs 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 January 1, 2009–November 30, 2009, it:

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

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

Caution:The IRS has not suspended the one-rollover-per-year rule of Sec. 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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