IRS Updates 2009 Reporting Requirements for RMDs

The Internal Revenue Service (IRS) has modified reporting requirements applicable to required minimum distributions (RMDs) from individual retirement accounts (IRAs) to reflect the waiver of the RMD rules for 2009.

According to Notice 2009-09, issuers of the 2008 Form 5498, IRA Contribution Information, should not put a check in Box 11. However, in recognition of the short amount of time to make programming changes, if a financial institution issues a 2008 Form 5498 with a check in Box 11, the IRS will not consider such form issued incorrectly provided the IRA owner is notified no later than March 31 that no RMD is required for 2009.

In addition, if a financial institution sends a separate RMD statement to an IRA owner, either initially or in response to the owner’s request for the financial institution to calculate the RMD for 2009, the financial institution must show the RMD for 2009 as zero. The IRS said the financial institution may also send the IRA owner a statement showing the RMD that would have been required but for the waiver of RMDs for 2009, along with an explanation of the waiver.

On December 18, President George W. Bush signed into law a broad pension relief bill that includes a one-year moratorium on RMD rules (see “Bush Signs RMD, Pension Relief into Law’). Since then a 61-member U.S. House coalition has called on President Bush to order the U.S. Treasury Department to give investors the same relief for 2008 (see “House Members Demand 2008 RMD Relief from Bush’).

However, in its notice, the IRS encouraged all financial institutions to inform IRA owners who delayed taking their 2008 RMD until April 1, 2009, that they are still required to take that distribution.

Notice 2009-09 is available here.