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December 25, 2008
It's Never Too Late To Have a Happy Childhood
WRERA-New law affecting IRAs
The Worker, Retiree, and Employer Recovery Act of 2008 (WRERA), signed by then-President Bush less than a month prior to leaving office, provided that in 2009 only, nobody has to take a minimum required distribution (MRD) from an IRA or any qualified retirement plan, like 401Ks, 403Bs, 457s and others.
In all prior years, and presently in future years, if you are 70 ½, you have to take distributions. Also, in prior years, you had to take money out if you were an inheriting non-spouse, no matter what your age. At present time only a spouse can rollover your IRA when you die and treat it like he/she is the original owner. A life partner to whom you are not married or any other non-spouse inheriting an IRA has never had that right. WRERA provides that beginning January 1, 2010, all IRA inheritors, regardless of relationship, will be able to rollover, deferring any MRD until 70 ½.
Another feature of WRERA is that people can contribute to Roth IRAs, regardless of income level. In the past, people earning more than $100,000 yearly were prohibited from contributing to Roths. Regular IRAs can be partially or fully converted to Roth IRAs and taxes paid on the distributions, regardless of your earnings.
If you took MRDs in the past and want to stop them, contact your financial institution.
There is nothing in this law that prevents an IRA or other retirement plan owner from taking out assets and paying the taxes.
