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AARP Foundation
601 E. Street N.W.
Washington, DC 20049
Telephone: 800-775-6776
Fax: 202-434-6220
Office hours: Mon.-Fri., 7:30 am - 4:30 pm


Monica Estabrooke Gift Planning Officer	Marva Thomas Gift Planning Officer	Karen B. Gallardo Senior Director, Gift Planning & Major Gifts

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Pension Bill Waives 2009 IRA RMDs

On December 23, 2008, President Bush signed the Worker, Retiree and Employer Recovery Act of 2008. (H.R. 7327). This bill includes a key provision that will waive IRA, 401(k), 403(b) and some other types of required minimum distributions (RMDs) for 2009.

Under the IRS rules, individuals over age 70 are required to take required distributions each year from their IRAs. For most IRA owners, the distributions are paid out under the following Uniform Table. Payouts equal the balance the previous December 31 multiplied by a factor based upon age. More senior persons must take a larger withdrawal.

Age	IRA Approximate Payout
71	3.8%
75	4.4%
80	5.3%
85	6.8%
90	8.8%
95	11.6%

Because the value on December 31 of 2007 was used for RMDs in 2008 and the stock markets declined in late 2008, a number of IRA owners had to take larger distributions than would be expected in normal years. In order to enable individuals to rebuild their IRAs and other qualified plans, Congress has created an "RMD holiday" for 2009. During 2009, individuals may choose to not withdraw any amount even if they are over age 70. Of course, IRA owners over age 59 may still voluntarily withdraw without penalty and pay income tax on amounts from an IRA.

Several members of Congress also asked the IRS to make changes for year 2008. Because many individuals had already taken withdrawals in 2008, the IRS declined to make any changes for year 2008. The "RMD holiday" applies only to year 2009.