Required Minimum Distributions Waived for 2009 

On December 23, President Bush signed into law the Worker, Retiree and Employer Recovery Act of 2008.  In addition to significant pension legislation, this law waives the 2009 requirement that IRA owners age 70 1/2 or older during 2009 take minimum distributions.  Also, beneficiaries of traditional and Roth IRAs are not required to take minimum distributions from IRAs for 2009.  Similar waiver rules may apply to employer plan participants and their beneficiaries. 

This law is in effect for one year.  We will plan to take your distribution unless you notify us otherwise.  You will need to come in and sign a waiver if you do not want to take your distribution. 

 

Traditional IRA 

Reap the benefits of lower taxes with a traditional IRA.  

 

Roth IRA 

A Roth IRA allows only nondeductible contributions, but features federal income tax-free withdrawals for certain distribution reasons after a five-year holding period.  You can always get back your principal tax-free and IRS penalty free for any reason. 

 

Who is eligible? 

Anyone younger than 70 ½ for the entire tax year who has compensation. 

When can I withdraw funds? 

Distributions must begin by age 70 1/2.  

Withdrawals after age 59 1/2 can be made but are taxed at the taxpayer's current tax bracket.  

 

Traditional and Roth IRA Contribution Limits: 

Tax Year        Limit              Catch-up contribution limit      Contribution limit for age 50+ 

2008               $5000                          $1000                                  $6000 

2009 +          $5000 + cost of living adjustment (COLA)       $6000 

*Subject to income limits. See your tax advisor. 

 

Education IRA 

The education IRA is a nondeductible account that features tax-free withdrawals for a child's higher education expenses. Distributions must be made during the year in which the education expense occurs. The child who benefits can not have had any contributions made on their behalf to a state prepaid tuition program in that year. Also, your modified adjusted gross income cannot exceed certain limits. 

* Subject to income limits. See your tax advisor. 

 

SIMPLE 

Savings Incentive Match Plan for Employees is a great way for small businesses to help their employees save. It is a retirement plan set up by the employer where the employees can fund a retirement by salary deductions. Employee elective deferrals and employer matching contributions are tax deferred to the participant and tax deductible to the employer. Earnings also grow tax deferred. To be eligible the employer must have had 100 or fewer employees who each received at least $5000 pay for the preceding year. The employer also may not have any other retirement plan while carrying a SIMPLE. 

 

SEP 

A Simplified Employee Pension plan is a business retirement plan in which the employer places money into its employees' IRA's. The employer gets an immediate tax break, and the contribution is not income to the employee until distributed from the IRA. The employer is responsible for ensuring that the plan is established and administered in a proper manner. Employers can have a SEP in addition to IRA's and can have a SEP for each individual business. 

 

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Health Savings Account 

Our Health Savings Account is an interest bearing checking account established for the purpose of paying medical expenses in conjunction with a high-deductible health plan (HDHP). An HDHP is a plan with an annual deductible of at least $1100 for individual coverage or $2200 for family coverage.  For 2008, maximum out of pocket expenses may not exceed $5600 for individual and $11,200 for family coverage.  Contributions to an HSA are fully deductible, earnings grow tax deferred and distributions for qualified medical expenses are tax-free.  Contributions can be made at any time for a taxable year up to and including April 15th.   

Minimum to open:  $100     Service fee:  $25/yr     Minimum balance:  none     Monthly fees:  none 

Variable interest rate, currently: 1.49%