Reinvesting 2009 required minimum distributions
October 14, 2009
November 30 deadline
If you want to roll over 2009 RMDs, you must do so by November 30 in most cases.
Recent market volatility has dramatically affected many retirement accounts. Required minimum distributions, or RMDs, for 2009 were suspended late last year without penalty to help older investors avoid having to draw down their savings even more.
The suspension isn’t mandatory, so you can still take any withdrawals you need.
The IRS recently announced that investors who have received 2009 RMDs can roll them back into retirement accounts. The rules about returning the money depend on the account your RMD came from:
- RMDs from your company retirement plan: You can roll over 2009 RMDs you received into an IRA or, if the plan accepts rollovers, back into the employer’s plan or another plan — even if you’ve already cashed or deposited the checks. You can roll over all or part of the combined total of 2009 RMD payments.
- RMDs from IRAs: You may be able to roll over some or all of your 2009 RMDs you received back into the IRA or into another IRA. You may also be able to roll money into an employer’s retirement plan if the plan accepts rollovers.
Things to keep in mind:
- There’s a one-rollover-per-year rule for IRAs. Contact the IRS for more information.
- 2008 RMDs taken in 2009 cannot be rolled over. If 2008 was the first year you had to take an RMD, you may have delayed taking it until April 1, 2009.
How to roll over RMDs you’ve already received
- If you want to roll into an employer’s plan, ask if the plan accepts rollovers. If it does, the employer can tell you how to roll over the money.
- If you want to roll into an IRA, ask your IRA trustee or custodian for a rollover form.
You must act soon
Rollovers of 2009 RMDs are only allowed until November 30, 2009, or 60 days after you receive the distribution, whichever is later.
RMD basics
Normally, RMDs must be taken every year by retirement plan participants and traditional IRA owners, generally after they reach age 70-1/2. Beneficiaries who have inherited retirement plan or traditional IRA assets are also required to take RMDs. If the RMD is not withdrawn, the IRS imposes a 50% tax on the amount that should have been withdrawn. Roth IRAs are not subject to RMDs while the IRA owner is alive.
How to stop 2009 RMDs not yet received
If you’ve been taking RMDs on your own, don’t take a distribution in 2009. If you’ve signed up to have RMDs from a company retirement plan sent to you automatically, contact your employer to find out what to do. To stop RMDs from an IRA, contact your financial professional or IRA custodian.
RMDs to resume in 2010
Minimum distribution requirements will resume in 2010. Your employer can help you restart your automatic RMDs for 2010.
Find out more
See our Taking distributions article for more information about withdrawals.
Talk to your financial professional to learn more about RMDs and the 2009 suspension.
Investors should carefully consider the investment objectives, risks, charges and expenses of the American Funds. This and other important information is contained in each fund’s prospectus and/or summary prospectus, which can be obtained from your plan’s financial professional or downloaded and should be read carefully before investing.