Required Minimum Distributions (RMD) Background and Summary
On December 23, 2008, President Bush sgned into law the Worker, Retiree, and Employer Recovery Act. The Act states that no RMD is required for 2009. As you are aware, the current global economic conditions have caused sharp declines in many contract values. This Act is designed to provide relief to contract owners who would otherwise be forced to take a distribution in 2009. The goal is to not force contract owners to take a distribution when their contract value is at a low point and instead allow those funds to stay invested in the contract and participate in any economic recovery.
- The RMD Rules, Briefly Stated:
- Individuals are required to take at least a minimum annual distribution from their account after they reach their required beginning date, which is the April 1 after they reach age 70 1/2.
- For beneficiaries of deceased individuals not already receiving RMDs, the required beginning date is either following the 5th anniversary of death (for a complete distribution) or following the 1st anniversary of death (for a periodic distribution). Special rules apply if the only designated beneficiary is the surviving spouse.
- The Situation That Congress Sought to Relieve:
- In the current economic environment, many contract values have been diminished by the deep declines in the stock market.
- Congress was concerned that requiring individuals to take 2009 RMDs could have the unintended effect of forcing individuals to “sell low.” As a result, the RMD would diminish the likelihood of the individual being able to participate in any economic recovery.
- What This Act Changes:
- No RMD is required for 2009.
- Any individual who attains age 70 ½ in 2009 will not be required to take a first RMD by April 1, 2010, but the distribution for the 2010 calendar year must be taken by December 31, 2010.
- If the individual takes a partial withdrawal, the distribution is not subject to the mandatory 20% withholding that is typically required of RMDs.
- For beneficiaries under the 5-year rule, the 5-year deferral period is extended by one year (e.g., if an individual died in 2007, the period would end in 2013 instead of 2012).
Please click the link below to the frequently asked questions and answers (FAQs) to help you to understand this Act.
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This information is provided as general guidance. It is not intended to be legal or tax advice. Any taxpayer should seek advice based on the taxpayer's particular circumstances from an independent tax advisor.
Annuities are issued by ING USA Annuity and Life Insurance Company (Des Moines, IA) and ReliaStar Life Insurance Company of New York (Woodbury, NY). Variable annuities are distributed by Directed Services LLC. Only ReliaStar Life Insurance Company of New York is admitted, and its products issued within the state of New York. All are members of the ING family of companies. ING Annuities is a marketing name for the issuing insurance companies. Products and services may vary by state and may not be available in all states.
Variable annuities are long-term investments designed for retirement planning. They are a contract between you and an insurance company, under which the insurer agrees to make periodic payments to you. Additionally, variable annuities offer the opportunity to allocate premiums among fixed and variable investment options that have the potential to grow income tax-deferred, until an income stream begins. These payments, called annuity income, will begin either immediately or at a future date and a part of which may be the return of your premium or principal. This income is guaranteed by the issuing insurance company for a specified period of time or for the life of the annuitant. Optional benefits and riders are available for an additional cost.
Variable insurance products are subject to investment risk, are not guaranteed and will fluctuate in value. In addition, there is no guarantee that any variable investment option will meet its stated objective.
All guarantees are based on the financial strength and claims paying ability of the issuing insurance company, who is solely responsible for all obligations under its policies.
You should consider the investment objectives, risks and charges, and expenses of the variable annuity and its underlying investment options carefully before investing. The prospectuses for the variable annuity and underlying investment options contain this and other information. You may obtain free prospectuses by calling your financial professional or 800-366-0066. Please read the prospectuses carefully before investing.
©2008 ING North America Insurance Corporation
cn62083122009
152642 12/23/08
Annuities are issued by ING USA Annuity and Life Insurance Company (Des Moines, IA) and ReliaStar Life Insurance Company of New York (Woodbury, NY). Variable annuities are distributed by Directed Services LLC. Only ReliaStar Life Insurance Company of New York is admitted, and its products issued within the state of New York. All are members of the ING family of companies. ING Annuities is a marketing name for the issuing insurance companies. Products and services may vary by state and may not be available in all states.
Variable annuities are long-term investments designed for retirement planning. They are a contract between you and an insurance company, under which the insurer agrees to make periodic payments to you. Additionally, variable annuities offer the opportunity to allocate premiums among fixed and variable investment options that have the potential to grow income tax-deferred, until an income stream begins. These payments, called annuity income, will begin either immediately or at a future date and a part of which may be the return of your premium or principal. This income is guaranteed by the issuing insurance company for a specified period of time or for the life of the annuitant. Optional benefits and riders are available for an additional cost.
Variable insurance products are subject to investment risk, are not guaranteed and will fluctuate in value. In addition, there is no guarantee that any variable investment option will meet its stated objective.
All guarantees are based on the financial strength and claims paying ability of the issuing insurance company, who is solely responsible for all obligations under its policies.
You should consider the investment objectives, risks and charges, and expenses of the variable annuity and its underlying investment options carefully before investing. The prospectuses for the variable annuity and underlying investment options contain this and other information. You may obtain free prospectuses by calling your financial professional or 800-366-0066. Please read the prospectuses carefully before investing.
©2008 ING North America Insurance Corporation
cn62083122009
152642 12/23/08