Memo #
23203

IRS Issues RMD Guidance on Form 5498/Other Notifications; Draft RMD Issues List for Treasury -- Comments Requested by January 30
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ACTION REQUESTED

[23203]

 

January 23, 2009

TO: PENSION COMMITTEE No. 3-09
PENSION OPERATIONS ADVISORY COMMITTEE No. 3-09
TRANSFER AGENT ADVISORY COMMITTEE No. 8-09
BANK, TRUST AND RECORDKEEPER ADVISORY COMMITTEE No. 3-09     RE: IRS ISSUES RMD GUIDANCE ON FORM 5498/OTHER NOTIFICATIONS; DRAFT RMD ISSUES LIST FOR TREASURY -- COMMENTS REQUESTED BY JANUARY 30

 

On January 9, 2009, the Internal Revenue Service issued Notice 2009-9  [1] that addressed questions related to the 2009 waiver of required minimum distributions provided by the Worker, Retiree, and Employer Recovery Act of 2008.  [2] The Notice does not address all the issues raised by the Institute members, and we drafted the attached list of issues to submit to Treasury based on your comments. Please let me know by email (adriggs@ici.org) or phone (202-218-3573) if you have any comments on the attached draft by January 30th.

 

Notice 2009-9 clarifies the following issues:

 

  • Individuals who became RMD-eligible in 2008 must still take their RMDs by April 1, 2009. Financial institutions are encouraged to inform IRA owners that delayed taking their 2008 distributions until 2009 that they are still required to take these distributions.
  • If a beneficiary receives distributions over a 5-year period, he or she can now waive the distribution for 2009, effectively taking distributions over a 6-year rather than a 5-year period.
  • Issuers of the 2008 Form 5498 should not put a check in Box 11 (“Check if RMD for 2009”). However, “in recognition of the short amount of time to make programming changes,” a financial institution that issues a 2008 Form 5498 with a “check” in Box 11 will still be in compliance, provided the IRA owner is notified by the financial institution no later than March 31, 2009, that no RMD is required for 2009.

The annual RMD information required to be sent to IRA owners in accordance with IRS Notice 2002-27 need not be sent in 2009.  [3] However, if a financial institution sends a separate RMD statement to an IRA owner, either initially or in response to the owner’s request to calculate the RMD for 2009, the financial institution must show the RMD for 2009 as zero. Alternatively, the financial institution may send the IRA owner a statement showing the RMD that would have been required but for the waiver of RMDs in 2009, along with an explanation of the waiver for 2009.

 

 

Anna Driggs
Assistant Counsel

 

Attachment

 

endnotes

 [1] A copy of the Notice is available here: www.irs.gov/pub/irs-drop/n-09-09.pdf.

 [2] See Memorandum to Pension Members No. 79-08, Federal Legislation Members No. 17-08 [23123], dated December 12, 2008; Memorandum to Pension Committee No. 35-08, Pension Operations Advisory Committee No. 35-08 [23146], dated December 23, 2008, and also Memorandum to Pension Members No. 80-08, Federal Legislation Members No. 18-08 [23134], dated December 18, 2008.

 [3] See Memorandum to Operations Members No. 12-02, Pension Members No. 17-02, Pension Operations Advisory Committee No. 25-02, Transfer Agent Advisory Committee No. 34-02 and Ad Hoc Committee on RMD Reform [14640], dated April 18, 2002.