In one of his last acts, President George W. Bush signed the Worker, Retiree and Employer Recovery Act (H.R. 7327) on December 23rd, 2008. According to Fred Schneyer from Planadviser.com, one aspect of the measure “suspends for 2009 the requirement that individuals 70 1/2 and older must withdraw a minimum amount from their 401(k) plans or IRAs and that those who do not are subject to a 50% penalty on the amount that should have been withdrawn”.
One of the reasoning for this moratorium was that retirees over the age of 70 1/2 were forced to sell their retirement funds and diminish its value when the market is currently at its lowest in recent history. Schneyer’s article stated that retirees “had the potential to seriously diminish the retirement nest egg” but thanks to the Worker, Retiree and Employer Recovery Act, retirees can have the option to wait to see if the market recovers before selling. The Act goes into effect in 2009 and, as of now, will only be for that one year.
For more information, please read Fred Schneyer’s article which can be found here:
http://www.planadviser.com/compliance/article.php/3398
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