Some new changes for 2009 post Jan. 12th, 2009 - source RIA tax service

Changes Affecting Retirement and Estate Planning
New law waives required minimum distributions (RMDs) for calendar year 2009. A new law enacted in late 2008 provides that retirement plan account participants, IRA owners, and their beneficiaries do not have to take RMDs for 2009. (Code Sec. 401(a)(9)(H)) Thus, taxpayers who can take advantage of this change won't be forced to sell stock or mutual fund shares held in retirement accounts when their value is exceptionally depressed.

Increase in estate tax exemption. The applicable exclusion amount (the amount excluded from estate tax by the unified credit) increased from $2 million to $3.5 million for estates of decedents dying in 2009. (Code Sec. 2010(c)) The top rate remains at 45%. Barring further Congressional action, the estate tax is repealed for 2010 deaths, only to be reinstated for deaths occurring in 2011 and later with a $1 million exemption and a top rate of 55%.

RIA observation: Congress presumably will not let the estate tax return to a $1 million exemption and a top rate of 55% in 2011. On the other hand, it is doubtful that Congress will permanently repeal the estate tax. The most likely scenario would be a permanent increase in the exemption to somewhere between $3.5 and $5 million, perhaps with inflation adjustments.


Credit for plug-in electric drive vehicle. For tax years beginning after Dec. 31, 2008, a tax credit is allowed for new qualified plug-in electric drive motor vehicles (NQPEDMVs). (Code Sec. 30D) Subject to a limit based on weight, the credit amount is the sum of: (1) $2,500; plus (2) $417 for each kilowatt hour of traction battery capacity in excess of 6 kilowatt hours. (Code Sec. 30D(a)(2))

Qualified bicycle commuting reimbursement. For tax years beginning after Dec. 31, 2008, qualified bicycle commuting reimbursements are qualified transportation fringe benefits. (Code Sec. 132(f)(1)(D)) Qualified bicycle commuting reimbursements are, for any calendar year, any employer reimbursement during the 15-month period beginning with the first day of that calendar year for reasonable expenses incurred by the employee during that calendar year for the purchase of a bicycle and bicycle improvements, repair, and storage. The benefit is limited to $20 (not adjusted for inflation) multiplied by the number of months during the year that an employee regularly uses a bicycle for a substantial portion of the travel between his residence and his place of employment.