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Any tax impact if I don’t take IRA distributions in ’09?

by on
in Small Business Tax

Q. I’m not taking my required IRA distribution for 2009. But could this have other tax repercussions? O.W., Louisville, Ky.

A.
Possibly. If you’ve taken distributions in the past, you might be assessed an estimated tax penalty if you’re not careful. Reason: With a required minimum distribution made late in the year, you’re treated as having paid the tax withheld in four equal installments. To avoid potential problems if you don’t take an RMD this year, make sure you pay the required tax for each quarterly due date.

The installment for the first quarter is due on April 15, 2009 (the same date as the deadline for filing 2008 returns).

Tip:
Alternatively, you could arrange to have tax withheld from your Social Security benefits. To begin withholding, file Form W-4V, Voluntary Withholding Request. Find it at www.irs.gov/pub/irs-pdf/fw4v.pdf.

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