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4 retirement tax goodies in new pension package

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in Small Business Tax

Late last year, Congress passed new pension-related tax breaks. President Bush signed the Worker, Retiree, and Employer Recovery Act of 2008 into law on Dec. 23.

Alert: The new law suspends the rule for required minimum distributions (RMDs) for one year. It also eases funding requirements for pension plans and clarifies certain other points in the massive Pension Protection Act of 2006 (PPA). 

Here’s a quick rundown of four new law provisions you should know about:

1. Required minimum distributions:
Generally, you must begin taking RMDs from your qualified retirement plans and traditional IRAs (but not Roth IRAs) after you’ve reached age 70½. This requirement is postponed for qualified plan distributions if you’re still working and don’t own 5% or more of the company. If you fail to take the annual required distribution, the IRS will assess a hefty 50% penalty tax on the shortfall.

The amount of the required dist...(register to read more)

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