Pension Digest Alert
Congress has passed the Emergency Stabilization Act of 2008
October 3, 2008

 

Congress has passed the Emergency Economic Stabilization Act of 2008. The House of Representatives voted 263-173 to concur with the revised Senate bill. President Bush immediately signed this Act into law. Our October newsletter will cover the new law in more detail. It will certainly be covered in more detail at our upcoming seminars. Here is a short summary of the provisions affecting IRAs and the change in the FDIC insurance limit to $250,000.

1. Tax-Free Distributions from IRAs for charitable purposes has been reauthorized and applies for 2008 and 2009. This law applies to any qualifying distribution after December 31, 2007.
   
2. Temporary Tax Relief For Areas Damaged By 2008 Midwestern Severe Storms, Tornados and Flooding. This involves certain areas within the states of Arkansas, Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska and Wisconsin. In general, the same tax benefits which apply to the Hurricane Katrina, Rita and Wilma individuals will apply to individuals of the above states. The 10% tax will not apply to certain distributions even if the individual is under age 59½. The 20% mandatory withholding does not apply. There will be a 3 year period during which an individual will be able to rollover a distribution. And an individual can elect to use a special distribution rule allowing the person to include 1/3 of a distribution in income for the year it was received and then include 1/3 in each of the following two years. There are also some changes impacting pensions plans and these will be discussed in the October newsletter
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3. FDIC Insurance Limit is increased to $250,000 for all insured deposits. This is effective immediately through December 31, 2009.
   
4. Exxon Valdez Litigation. There is a special averaging rule for certain amounts received with respect to the Exxon Valdez Litigation. Such amounts can be specially contributed into a traditional IRA account and certain other eligible retirement plans. Such amounts can also be specially contributed to a Roth IRA or or a Designated Roth account.