RMDs suspended for 2009

Investors age 70½ or older will not have to take a required minimum distribution (RMD) from their tax-deferred retirement accounts in 2009, thanks to a new federal law.

The measure is intended to help retirees conserve their resources after the last year's sharp stock market downturn.

Normally, investors over age 70½ are required to take an annual withdrawal (based on their life expectancy and prior year's account balance) or pay a 50% penalty on the amount they should have withdrawn.

Lawmakers who voted for the measure suspending RMDs in 2009 said it was unfair to require retirees to withdraw money from retirement accounts already reduced in value by the stock market selloff. This would presumably leave more money in investors' retirement accounts, where it would have the potential to continue growing tax-free until withdrawal.

The 2009 RMD suspension applies to IRAs, 401(k)s, 403(b)s, and other defined contribution plans. The suspension also applies to investors under age 70½ with inherited IRAs or inherited retirement plan accounts that would otherwise be subject to RMDs.

What about 2008 RMDs?

It is important to note that the new law does not suspend RMDs for 2008.

If you were over age 70½ for all of 2008 and you haven't requested your 2008 RMD on savings held at Vanguard, you have until 4 p.m. Eastern time, Wednesday, December 31, to do so. If you turned 70½ during 2008, you have until April 1, 2009, to request your distribution for 2008.

You can request your distribution from Vanguard online, by phone, or by mail. If you're planning to request a distribution by mail, we strongly recommend doing so at least a week ahead of time in order to meet the deadline. 


  • We recommend that you consult a tax or financial advisor about your individual situation.
  • Investments are subject to market risk.
  • If you take withdrawals from an IRA before age 59½, you may have to pay ordinary income tax plus a 10% federal penalty tax.

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