Nov. 30 is the deadline for most people to reinvest any unwanted minimum payouts from retirement plans. When people with IRAs, 401(k)s, and other qualifying plans reach the age of 70½, they must begin taking at least minimum required distributions (RMDs) from these plans, according to IRS rules. But there was widespread sentiment to waive this requirement for 2009 RMDs because big 2008 investment losses would have forced many retirees to sell holdings at depressed prices.
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Congress enacted the waiver but it came so late in 2008 that many retirement plan administrators and retirees had already set their 2009 RMDs in motion. This prompted other rule changes that will allow any 2009 RMDs to be returned or rolled over into existing or new retirement plans. However, the IRS rules state that the rollovers must occur by Nov. 30 or 60 days after the date the distribution was received, whichever is later.
The government stimulus program has tax provisions that might affect your year-end tax planning. Here are items listed by the IRS and its links to program details:
- Making Work Pay Tax Credit. This tax credit means more take-home pay for many Americans. To make sure enough tax is withheld from their pay, taxpayers can use the IRS withholding calculator. See Making Work Pay for more.
- First-Time Home Buyer Credit Expands. Home buyers who purchase in 2009 can get a credit of up to $8,000 with no payback requirement. New legislation extends and expands this credit.
- Money Back for New Vehicle Purchases. Taxpayers who buy certain new vehicles in 2009 can deduct the state and local sales taxes they paid or other taxes and fees they paid in states with no sales tax.
- Education Benefits. The new American opportunity credit and enhanced benefits for 529 college savings plans help families and students find ways to pay higher education expenses.
- Enhanced Credits for Tax Years 2009, 2010. Find details on the earned income tax credit and the additional child tax credit.
- Increased Transportation Subsidy. Employer-provided benefits for transit and parking are up in 2009.
- Up to $2,400 in Unemployment Benefits Tax Free in 2009. Individuals should check their tax withholding.
- $250 for Social Security Recipients, Veterans and Railroad Retirees. The Economic Recovery Payment will be paid by the Social Security Administration, Department of Veterans Affairs and the Railroad Retirement Board.
- Energy Efficiency and Renewable Energy Incentives. See what individuals can do to reap tax rewards.
- Health Coverage Tax Credit. The credit increases from 65 percent to 80 percent of qualified health insurance premiums, and more people are eligible.
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Reader Comments Read all comments (1)
bootheolmo of HI 11:40AM December 14, 2009