Admittedly, this is likely a small group: folks who are required to take RMD’s in every other circumstance, but for 2009 were given a holiday from RMDs due to WRERA 2008 – but still went ahead and took the distribution for this year… and now they want to put it back.
The IRS must think it’s a fair large group, because they’ve put out a special notice – Notice 2009-82 for you IRS geeks out there (okay, I resemble that) – to deal with this subject.
The deal is this: if you’re in that group mentioned above, you can roll your distribution back into the same or another IRA (or other qualified plan), as long as you do it before November 30, 2009 (rather than the usual 60 days). This is a nice feature, although I really doubt if there’s that awful many folks who will fit the circumstances.
The Kicker
Here’s the kicker, though: this special rollover applies ONLY to the REQUIRED Minimum Distribution. So if you were required, based upon your Table I or Table III values, to take out $10,000 this year (were it not for the RMD holiday), and you actually took out $15,000, you can only rollover $10,000 (unless you get it done within 60 days, as per normal circumstances).
The Second Kicker
The second kicker is that, if you took that $10,000 in equal quarterly installments, since you’re restricted to one (1) "rollover" per year, you can only roll one of those payments back into your IRA. If you took the distribution from a qualified plan, such as a 401(k) or 403(b), you can roll the all of your RMD payments (but just the RMD, no more) into an IRA.
All is not lost if you took money from an IRA in multiple payments: you could still put the extra funds into a Roth IRA before 11/30/2009, with the amounts being taxed, but now they are in your Roth IRA (as long as all other eligibility rules are met, such as MAGI less than $100,000 and you don’t file your taxes as Married Filing Separately).
So anyhow, if you’re in this slice of folks, there’s some leniency by the IRS in letting you undo the distribution for this year, as long as you get it done before the end of November.
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I can learn from you, you can learn from me - please leave your comments and links!Jim Blankenship, CFP®, EA, is an expert in personal retirement, IRAs, and tax issues, with more than 25 years of experience in the industry. Read more from this author
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