Michael H. Ostrem     mostrem@mulliganbjornnes.com

While their value may have decreased significantly over the last year, retirement plans remain a significant part of most estates. The executor of the estate will have some responsibility in seeing that the plans get to the right beneficiaries, even though the plans will probably never be a part of the probate estate. The beneficiaries will then have a choice to make in whether to withdraw the entire account, or let it continue to grow tax-free.

Depending on the relationship of the beneficiary to the decedent, the length of time that the account can be maintained without paying income tax will vary significantly. Some beneficiaries will be able to roll the plans into their own IRA; others will be able to withdraw the account assets over their life expectancy; while others will need to withdraw the assets within five years of after the decedent’s death.

In 2008, Congress passed a bill intended to ease the pain of the nation’s plummeting retirement account values. This bill eliminated the 2009 required minimum distribution (the “RMD” or “MRD”) requirement for retirement account owners. The RMD requires every owner of a retirement account who is over the age of 70 ½ to withdraw a certain percentage of his or her account every year. The elimination of the RMD for 2009 was passed so that taxpayers would not be forced to withdraw a portion of their account while it is presumably at its lowest value in years. If you are over 70 ½ and have inherited an IRA or other retirement account in the recent past, or have an account of your own, you should speak with your tax preparer or attorney to determine whether this new law may be a benefit to you.