I'm 72 and still working. I forgot to take a required minimum distribution from my IRA for 2008. Am I subject to penalty?

I'm 72 and still working. I forgot to take a required minimum distribution from my IRA for 2008. Am I subject to penalty?

Required minimum distribution (RMD) rules apply to traditional IRAs for 2008. This means that even though a person is working, he or she must take the RMD for 2008 from a traditional IRA. The distribution is based on the account balance as of the end of 2007, even though the value of the account may have dropped substantially during 2008 because of poor stock market performance.

You can ask the IRS to waive the 50% penalty on insufficient distributions. The IRS has authority to waive the penalty if the failure is the result of reasonable cause, such as health problems, and steps are being taken or have been taken to correct the problem. What to do: Take the RMD as soon as practical if you have not already done so. Then, when filing your 2008 return, complete Form 5329 along with your own explanation for the failure. You do not have to paid the penalty up front when you ask for a waiver (enter "RC" on the line otherwise used to report the penalty). The IRS usually has 3 years in which to act; once this time has passed and you aren't asked for payment, you're in the clear.

Under a new law, RMD rules are suspended for 2009, so no distribution is required to be taken during 2009. However, you can take withdrawals from the account during 2009; distributions are not barred.