Press Releases

12/30/2008

Individuals/Retirees

Many retirees, especially those who have recently retired, have been rocked by the nose-dive in value of their retirement savings accounts since September. Existing tax rules would have forced them to further deplete their tax-deferred nest eggs when they are at their lowest by taking required minimum distributions from their qualified plans or IRAs. A recent tax law change promises to give retirees some much needed financial flexibility. A key provision in the recently passed Worker, Retiree and Employer Recovery Act of 2008 is designed to help alleviate the financial burden facing those who have seen their retirement savings shrink dramatically. The new provision provides relief by waiving required minimum distributions from 401(k) plans, IRAs and similar retirement accounts for 2009, allowing individuals to continue to keep money in retirement accounts that they are typically required by law to withdraw once they reach age 70 1/2.  This waiver, which is available to everyone regardless of their total retirement account balances, applies to all defined-contribution plans, including 401(k), 403(b), 457(b), and IRA accounts. Suspending the mandatory withdrawal allows retirees to keep the money in their account if they choose, and possibly recover some of their losses. Note: RMDs for 2008 are not waived by the new law.

Businesses

Two powerful business tax breaks were removed from the final version of the new law: extensions of 50-percent business depreciation and increased Code Section 179 expensing. Although both incentives are on track to terminate at the end of 2008, chances remain very good that these tax incentives will be extended into 2009, retroactively in the stimulus bill set for passage in January under the new Obama Administration.

As always, discuss with your tax professional prior to taking any action.