Investing Basics
IRAs: Required Minimum Distributions

At age 70^1/2, you must begin withdrawing minimum amounts from any account from which you've benefitted from pretax contributions and tax-deferred earnings. Roth IRAs are not subject to RMD rules. Account types subject to the Internal Revenue Service's required minimum distribution rules include:

• Traditional IRAs
• Rollover IRAs
• SEP IRAs
• SIMPLE plans and Keoghs
• Employer-sponsored plans, such as 401(k)s

New for 2009: The newly enacted Worker, Retiree and Employer Recovery Act includes a provision that suspends required minimum distributions for the year 2009. Here's what this means:

If you turned 70^1/2 in 2008, and elected to defer your 2008 RMD until April 1, 2009, you must still take it. However, you are not required to take a 2009 RMD, which you would otherwise have had to receive between January 1, 2009, and December 31, 2009.

If you were 70^1/2 prior to 2008, you are not required to take a 2009 RMD, which you would otherwise have had to receive between January 1, 2009, and December 31, 2009.

If you turn 70^1/2 in 2009, you may skip your 2009 RMD and instead take your first RMD in 2010 between January 1, 2010, and December 31, 2010.

It's important that you understand how the RMD rules may affect you, since the IRS can impose a hefty penalty for missed or insufficient distributions. A Homestead Funds' representative can help you determine whether you need to take a distribution from your account in order to satisfy this IRS requirement and, if so, how much. Just call 1-800-258-3030 to speak with one of our friendly client service associates.

You can read more about this topic in the Helpful Tips guide, Taking Your Required Minimum Distribution.