Changes to RMD Law Passes House

Update 12/24/08: Want to know the economic impact of the RMD waiver?  Read this post on FPPad.com. 

Late on Wednesday December 10, the House of Representatives passed H.R. 7327, the Worker, Retiree and Employer Recovery Act of 2008.  See the main House.gov press release here.  This bill suspends the 50% excise tax assessed when a taxpayer fails to take minimum required distributions from a retirement account. (See Senate vote update below)

I first wrote about potential changes to the RMD laws in this FPPad post, Are You Ramping Up for Potential RMD Changes? It wasn’t clear if the changes to the RMD requirements were going to apply for the 2008 tax year, so depending on what Congress did, there may have been a potential opportunity to delay distributions if they had not yet been taken.

The bill that passed waives the 50% penalty for tax year 2009.  Therefore, as of today, there’s no reason why an RMD for 2008 should be delayed any longer.  The waiver of the penalty does not apply for tax year 2008.

Want to know all the details about the bill?  The provisions pertaining to changes in the minimum required distributions start on page 68 of the full-text document of H.R. 7327.

The bill will advance to the Senate for the next round of voting.  Update! On December 11, the Senate passed the bill without amendment by Unanimous Consent.  Now it’s on to President Bush’s desk for signature into law.

You can track the bill’s progress on the GovTrack.us website.