Distribution Dilemma

Congress has suspended the required minimum distribution (RMD) rules for 2009. Generally, you must start RMDs from retirement accounts such as IRAs by April 1 of the year after you reach 70 1/2 if you wish to avoid a 50 percent penalty. (The same is true for IRA beneficiaries of any age.) This year, that penalty is canceled.

However, some people have arranged with their IRA custodian to send monthly payments that will provide enough distributions to meet the RMD rules. Those automatic payments may be continuing in 2009. If you (or your parents) are receiving such payments you are drawing down your IRA and incurring an income tax liability even if you don’t need the money now.

If that’s the case, contact your IRA custodian and request a suspension of your RMD payments until further notice. Any payments you already have received this year can be restored to your IRA within 60 days, with no adverse consequences. However, this "put-back" tactic can be used only once every 12 months, for each IRA.