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IRA distributions: Can I avoid tax with a rollover?

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in Small Business Tax

Q. I took a required $4,000 IRA distribution in 2008. Can I avoid tax by rolling over this amount to a regular IRA or a Roth IRA before April 15? S.H., Albuquerque, N.M.

No. First, note that required RMDs are temporarily suspended for the 2009 tax year by the new pension law signed in December 2008. But RMDs from IRAs and qualified plans generally are required for the 2008 tax year if you were age 70½ or older in 2008. You can’t avoid tax on the RMD by rolling over the same amount to an IRA or by converting this amount to a Roth IRA.

Tip: If you turned age 70½ last year, you still have until April 1, 2009, to take the RMD for 2008. Then you don’t have to take another RMD in 2009.

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