Treasury Official: No required minimum distribution relief for 2008

In a Dec. 17 letter to Rep. George Miller (D-CA), Chairman of the House Committee on Education and Labor, a Treasury official has said that IRS will not relieve retirement plan account participants and IRA owners of the need to take required minimum distributions (RMDs) for 2008. The only relief these taxpayers can look forward to is the Pension Act's waiver of the requirement to take RMDs for 2009.

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Worker, Retiree, and Employer Recovery Act of 2008

The Congress passed this Act last Thursday, December 11, and the president is expected to sign it.

The Act should help give older Americans some much needed financial flexibility as they struggle to manage their finances during this difficult economic time. A key provision in the Act is designed to help alleviate the financial burden facing seniors who have seen their retirement savings shrink dramatically. The new provision provides relief to senior citizens by allowing them to continue to keep money in retirement accounts that they are typically required by law to withdraw once they reach age 70 1/2.

The Act also includes important provisions that ease funding requirements for employer-sponsored pension plans. Absent the new legislation, these plans would have been forced to make significantly increased contributions during the current financial crunch when they are very short on cash. The new law provides pension funding relief for both single-employer and multi-employer plans.

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Estate Tax Articles on ABA website

Some recent articles of interest:

Stever Akers article on Bianca Gross v. Commissioner, which discusses the formation of a family entity, followed by a gift of interests in the entity.

Jim Roberts note on Simplicity in Valuation, which describes the Supreme Court's denial of certiorari in an 11th Circuit valuation case. This strenthens the argument that a valuation of a C corporation should reduce the value, dollar for dollar, by the amount of "built-in" taxes.

Sleep and Creative Thinking

Those of you who are my clients know that when I say "I'll give that problem some shower time," I'm not making a joke and you're likely to get my most creative solution. I take long showers in the morning, and I tend to hatch my most ingenious and innovative ideas while taking my morning shower. Now I have scientific evidence to explain why.

According to the article, We’ll Fill This Space, but First a Nap, sleep is very important to creative thinking. During sleep we continue to process information that leads to creative solutions to problems we're trying to solve in our waking hours. So, re-evaluation of a problem after "sleeping on it," like reconsidering a problem in the shower shortly after waking, many times leads to a solution. So, I'm not kidding when I say my most valuable time of the day is the time I spend in the shower in the mornings.

Year End Tax Planning

As the end of the year approaches, it is a good time to think of planning moves that will help lower your tax bill this year and possibly the next. Factors that compound the challenge include the stock market's swoon, the difficult economic climate we're in right now, and the strong possibility that there will be tax changes in the works next year. In fact, there might even be another economic stimulus package carrying tax changes enacted before the end of this year.

The good news: Congress has acted to “patch” the AMT problem for 2008, has retroactively reinstated a number of tax breaks (such as the option to deduct state and local general sales tax instead of state and local income tax and the above-the-line deduction for higher education expenses), and has created new tax breaks that go into effect for the 2008 tax year (including a tax credit for first-time homebuyers, a nonitemizers' deduction for state and local property tax and a nonitemizers' deduction for certain disaster losses). For 2008, businesses enjoy tax breaks such as a beefed-up expensing option and a 50% bonus first-year depreciation write-off for most machinery and equipment placed into service this year and a reinstated research credit.

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