A new tax law lets IRA and other retirement-account holders skip MRD withdrawals this year. Here's how it works:

• You can still take a withdrawal in 2009, but you don't have to. You would owe income tax on any withdrawal of pretax contributions and earnings from a tax-deferred account.
• The law applies to traditional IRAs, inherited IRAs, inherited Roth IRAs, 401(k)s, Roth 401(k)s, and other defined-contribution employer plans.

If you've set up automatic distributions from you IRA or 401k you'll want to call your custodian and suspend those MRD withdrawls.

A number of IRA custodians are trying to establish procedures, especially for investors who receive automated payments each year from their retirement accounts, that will allow account holders to suspend or trim required minimum withdrawals. But some don't plan to send letters outlining changes for 401(k) holders until April. In the meantime, some custodians are still mailing checks -- even to retirees who may not want them. Other custodians are stopping payments unless account owners ask for the funds.

There is a backstop for retirees: the "60-day rule." IRA owners can generally roll unwanted withdrawals back into their accounts, as long as they do so within 60 days. To do so, you can simply write a check to the IRA custodian for the same amount you received. You're allowed to do one rollover per account once every 12 months. Otherwise, the distribution is taxed. It's not uncommon for people to miss that deadline, and the IRS in recent years has been reluctant to approve requests for extensions.

Courtesy of WSJ.com