Company Pension, RMD rule changes

[MichaelB]

Companies whose pension funds suffered big losses this year will not have to replenish the money quickly under a relief measure that flew through the Senate Thursday and will next go to the president for his signature.

Senator Charles E. Grassley called the relief a stop-gap measure.

Because of strong market performance, big contributions made in the past, and a two-year phase-in of tougher financing rules passed in 2006, many companies have not had to pump much money into their pension funds in the last few years. But they suddenly faced the prospect of having to come up with a lot of cash because of this year’s financial crisis.

The bill also offers relief to people over the age of 70 who would normally be required to withdraw money from their 401(k) plans and individual retirement accounts or face big penalties. If signed into law, the measure will suspend the minimum-distribution rules in 2009, so that people do not have to pull money out at a time when many investments have lost value.

http://www.nytimes.com/2008/12/12/business/12pension.html?ref=business

Too bad the RMD rule change won't come into effect in 2008, when it is most needed. Typical washington - fixing yesterday's problem tomorrow.

 

[mickeyd]

If signed into law, the measure will suspend the minimum-distribution rules in 2009, so that people do not have to pull money out at a time when many investments have lost value.

I do not find myself in this catagory, but this appears to be great news for RMD folks who wish to extend the life of their IRA stash. I assume that many RMDers have already taken their distribution for 2008 so 2009 would make more sense.

 

[ziggy29]

I do not find myself in this catagory, but this appears to be great news for RMD folks who wish to extend the life of their IRA stash. I assume that many RMDers have already taken their distribution for 2008 so 2009 would make more sense.

I've heard they are thinking about how to allow people who have already taken RMDs in 2008 to "undo" them and put the money back in the IRA -- but that would be messy.

I think a simpler approach is this: let those hit with RMDs to choose to skip either 2008 OR 2009. Those who haven't taken it yet can skip it and take one in '09; those who have already taken theirs this year can skip it in '09. Not perfect, but at least simple and reasonably fair.

 

[charlie]

Does any one know if the Pension Relief Act was signed into law?

As an old geezer over 70 I sure would like to skip the 2009 RMD.

Thanks and cheers,

charlie

 

[ziggy29]

Does any one know if the Pension Relief Act was signed into law?

As an old geezer over 70 I sure would like to skip the 2009 RMD.

Yes. The President signed into law on December 23.

 

[REWahoo]

Charlie, yes it was passed. There's a thread about it around here somewhere...

 

[REWahoo]

Here's the thread: http://www.early-retirement.org/forums/f28/geezer-fires-alert-41400.html