"Our Goal is Client Success" Recent legislation has created a variety of tax and retirement planning opportunities for individual taxpayers. Some of these opportanivios are temporary and require your attention. in Decenbor 2008, the Worker, Retires, and tmployer Recovery Act of 2008 (2008 Recovery Act) wae enacted, which odifies the Pension Protection Act of 2006 (2006 FEA) to ease burdens Fesulting from the curzent economic crisis, The following are some of the highiights of the 2008 Racovery Act that affect individual taxpayers Required Minsmun Disteibutions suspended tex 2008: The 2008 Recovery Act temporarily suspends the penelty for failure to take a required minimum distribution from a retirement plan, Tho suspension means that retirees and IRA owners may choose to forego all or part ef thelr Fequired distribution for 2009 without penaiey, creating an oppertunity to Feduco their taxable incone for that year. In addition, ‘the suspension helps Fetiress and IRA omers avoid having to liquidate investments inva dewe market. Without the suspension, they could be forced to sell — nost likely at 4 steep loss due to the stock markot downturn — snveatments in their accounts in order to tako the distribution, or face a 50S tax penalty on the amount that should have been distributed. Ordinarity, account holders of individusl retirement annuities end Andivideal rotitenent accounts are required to begin taking distributions no Later than April 1 of the year following the year they attain age. 10 1/2, Except for 58 ovners, participants of omployar=provided tax-qualified plane generally mist begin’ receiving distributions by April 1 of the year following tho year in which they retire oz reach age 70 1/2, whichever 12 Tater. Required minimum distributions vsvally are taten over the recipient's Life expectancy but, in certain circumstances, continue after the death of the Fetiree or IRA owner over a S-year period. an didividuel who attaine age 70 1/2 in 2009 is not required to take @ distribution by April 1, 2010. However, that individual must Cake the requived minimm diateibution for 2010. ‘The suspension extends the S-year distribution period (if applicable) For exarple, the S-year period that began after an individual's death in. 2007 wilt end in’ 2013, instead of 2012. Required diaterbutions are not eligible for tax-free rollover. Nevertheless, an eligible rollover distribution made sn 2009 that would have boon a required distrinution hut for the 2008 Recovery Act is not subject to mandatory 20* withholding and say be rolled over within 60 days of the distribution. The suspension applice to tax~ qualified plans, $403(a) annuity contracte and $403 (b) plana, $457 plans maintained by a governmental eaployer and individeel retirement plans, 911 Main Street ‘5015 Grand Ridge Drive, Suite 200 ‘Adel, Iowa. $0003 West Des Moines, lowa 50265 Vox: 515.993.4640 Email: info@shortepa.net Fax: 515.993.5058,Including individual retirement accounts. The euspension dees not apply t2 roquired distributions for 2008. Rollovers fron Roth $401(K1 Accounts to Roth IRAs Under the 2008 Recovery Act, rollovers fron Roth $401 (k) account to a Roth IRh aze nst subject to the Roth IRA adjusted grasa income Linits oh contributions. Tus, individuals may makes taxefreo rollover from a Saoaignated Roth account” to Roth IRA without regard to any income Limit. A plan sponsor may elect to add designated Roth accounts to its zotironent plan, auch at 9 S401(K) plan, If 0, particcpants say make aftor~ tax contributions ro the plan in Liev of elective deferrals, A designaved Roth account enables the participant to accumulate eareings on the Contributions to the account thet will be excluded from income when the participant withdraws thes, provided certain requirements are net Aever the 2006 PPA, taxpayers may rollover a distribution fron any “eligible retiresent plan,” including 2 tax-qualified plan, into e Roth TRA, However, until 2010, generally only taxpayers with modified adjusted gross income undor $100,000 could make auch © rollover. Tho 2008 Recovery At eliminates the incone limit, effective for distributions made afeer 2007 Nonspouse Beneficiary Rollovers: Retiranent plang are required to permit nonepouse beneficiaries te rollover a decedent's interest in the pisn. Before the 2006 PPA, only Surviving spouses could roliover a decedea's interest ins esn-qualitied plan. the 2006 PFA changed this rile effective for distributions made efter 2006 eo that nonspouse beneficiaries could rollover a decedent's interest Hovever, the IRS interpreted the provision to mean that a plan could, Dot was not required to, offer ¢ direct rollover of a distribution to a nonspose Beneficiary. wotice 2007-1, 2007-5 T.R.8. 395, QsA-14, After the 2008 Recovery Act, all plans aust effer a direct rollover option to nonspouse beneficiaries boginning 2010. Rollovers by Airline Employees Airline workera whose defined benefit pension plan was terminated or frozen as 2 result of bankruptay’ (filed after Sepeenber 11, 2001, and peice to January 1, 2007) axa alloved to rollover bankruptcy paynents intended to replace lest’ retirenont income into « Roth IRA. The provision is effective for tranafere made after the date of enactment of the 2008 Recovery Act for airline payment snounts paid before, on, or after the date of enactnent. Please contact us to discuss how these opportunities may benefit you. Jona short, cPa Chele Obertester, CPA