While certain plan participants need to take Required Minimum Distributions (RMDs) during 2010, that could possibly change in the near future. Some legislators seem to feel that participants need more time for the financial markets to recover and to that end have proposed two pieces of legislation, H.R. 4421 and H.R. 2637, which would extend the suspension of RMDs that took place during 2009 as a result of legislation.

The participants who are usually required to take an RMD are: (1) age 70½ or older and no longer employed at their company or (2) age 70½ or older, still employed at their company and own more than 5 percent of the employer. But during 2009, legislation (specifically The Worker, Retiree and Employer Recovery Act of 2008) gave participants the option of not taking an RMD and not suffering any penalties because of this action. The aim of this suspension was to give the financial markets time to recover and give participants’ retirement accounts a chance to grow in value before taking their RMDs.

The aforementioned RMD suspension does not currently extend into 2010. However, proposed legislation such as H.R. 4421 would do so. Sponsored by Representative Joe Sestak, this bill was referred to House Committee on Ways and Means as of January 2010. A similar bill, H.R. 2637, would not only extend the RMD suspension into 2010, but would also increase the age at which a participant would be required to begin taking an RMD to 75. Sponsored by Representative James Sensenbrenner, this piece of legislation is also being reviewed by the House Committee on Ways and Means.