Do I need to take an RMD in 2009?

Written by Kyle Allen, Paragon financial advisor

  photo by D'Arcy Norman

This post is a continuation of, "When do I need to take an RMD?" posted on June 25, 2008.

First of all, what is an RMD?

A RMD is a required minimum distribution that is required to be taken from a retirement account beginning at age 70 1/2. (Read, "When do I need to take an RMD?" to learn more.

The required minimum distribution rules apply only to qualified plans such as 401(k)s and traditional IRAs. Roth IRAs play by their own rules.

The RMD is calculated with an IRS table that takes into account your life expectancy and retirement account balances.

This leads us to the title of this post, "Do I need to take an RMD in 2009?"

No, you do not.

As a result of the difficult economy, President Bush signed legislation on December 23, 2008 that suspended RMDs for 2009. The change in required minimum distributions applies only to 2009 distributions.

If you are like millions of Americans and see the opportunity in the market moving up, you may want to hold off on your distributions for 2009. If you don't need the money, it has historically been a mistake to sell when the market is down.

To learn more, read, "Big IRA Change:  Minimum Distributions on Hold" on Forbes.com.

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