Non-spousal IRA heirs of any age must take RMDs from both traditional and Roth accounts.
For how the IRS let some taxpayers put back 2009 RMDs they took out by mistake, click here.
In most cases, these forced RMDs are 100% taxable as ordinary income.
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The result: Stretch says the Treasury might allow taxpayers to use the depressed Dec. 31, 2008, value of their IRAs to calculate 2008 RMDs.
"This won't help the many who already took their 2010 RMDs, " says Blanche Lark Christerson, a managing director at Deutsche Bank Private Wealth Management.
The Treasury Department may still do something to reduce 2008 required minimum distributions (RMDs), says Clint Stretch, managing principal for tax policy at Deloitte Tax.
Folks who have inherited either traditional or Roth IRAs from anyone other than a spouse must also take RMDs, based on their own life expectancies.
If Treasury does grant relief, it will likely allow those who have already taken their RMDs to put some of that money back into their accounts.
That is, namely, the suspension of RMDs in 2009, followed by the return of RMDs last year, and the different deadlines for those new to RMDs in 2009 and 2010.
But, he says, it arguably does have "wiggle room" to provide relief by allowing 2008 RMDs to be based on an alternate later valuation date, rather than Dec. 31, 2007.
RMDs are based on life expectancy.
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Those seasoned enough to have celebrated that quirky half birthday know that in all subsequent years, the IRS requires distributions from those retirement accounts which have received years of tax deferral, known as RMDs, or Required Minimum Distributions.
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The folks who waited until this year to take their first RMDs will have to take two RMDs in this calendar year (one by April 1 to count for the 2010 distribution, and the other by Dec. 31 to count for 2011), possibly putting them in a higher marginal tax bracket.
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