On December 23, 2008, President Bush signed into law the "Worker, Retiree, and Employer Recovery Act of 2008", (the "Act"), which includes a waiver of minimum required distributions ("MRDs") in 2009. Important items to note follow.

• The 2009 MRD waiver extends to IRAs, SEP-IRAs, Simple IRAs, 401(k)s, and other defined contribution retirement plans. It does not apply to defined benefit retirement plans.



• Based on Congressional intent and not on a literal reading of the Act, those who reached age 70½ in 2008 and who elect to defer their 2008 MRD until 2009 will still have to take their 2008 MRD before April 2, 2009 and those who reach age 70½ in 2009 will not have to take their 2009 MRD either in 2009 or in 2010.



• The determination of the required beginning date ("RBD") is not changed. April 1, 2009 will still be the RBD for those who attained age 70½ in 2008 and will still be used to determine the method by which post- death MRDs must be taken from their accounts.



• "Five-year rule" beneficiaries get an extra year of deferral, automatically. For example, if an IRA owner died in 2007 before his RBD, his beneficiary now has until December 31, 2013 instead of December 31, 2012 to withdraw the balance. It is advisable to assume that this is the only deadline extended by the Act.



• Distributions taken in 2009 that would otherwise be MRDs will not be treated as "eligible rollover distributions" for purposes of the direct rollover and 20% withholding rules. Such distributions will, however, be eligible for rollover, subject to the normal 60-day rollover rule.



• Starting in 2010, qualified plans will now be required to allow non-spousal beneficiaries to make rollovers to inherited IRAs. Under the Pension Protection Act of 2006 and IRS Notice 2007-7, these rollovers were allowed only at the employer's discretion.



• Rollovers from designated Roth accounts to Roth IRAs will not be subject to the income and filing status limitations that apply to Roth IRA conversions. Thus, participants in designated Roth accounts can now roll that money directly to their Roth IRAs regardless of their income level or filing status.

For more information regarding this topic, please e-mail your requests to Salvatore J. LaMendola, or call Sal at (248) 457- 7204.

THIS ARTICLE MAY NOT BE USED FOR PENALTY PROTECTION.

Once touted as a less expensive alternative to the family limited partnership (FLP) or family limited liability company (FLLC), the restricted management account (RMA) is now dead. An RMA is an investment account established (under a written agreement) with a bank or brokerage firm. Generally, under the terms of the agreement, the investor agrees to relinquish control of assets to an investment manager for a term of years. During the term of the agreement, the investor cannot make withdrawals from the account, and transfers of the account are limited to family members.

The "non-tax" reason given for establishing such accounts was the improvement of the accounts' long- term investment performance. The fixed term of the RMA encouraged the investment manager to focus on long-term performance. In addition, the long-term relationship often resulted in lower management fees. Of course, the added benefit (to the investor) was the hoped-for valuation discounts for lack of control and marketability - without the expense of creating an FLP or FLLC.

Unfortunately, in Rev. Rul. 2008-35, 2008-29 (July 21, 2008), the IRS ruled that no marketability discount was appropriate for a depositor's gift of an interest in an RMA in which assets were under the management of a bank (and its investment advisors) and as to which the depositor could not remove the bank for at least five years and could only transfer the interest to close family members.

For more information regarding this topic, please e-mail your requests to Julius H. Giarmarco, or call Julius at (248) 457- 7200.

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Effective August 17, 2006, Internal Revenue Code Section 6039I requires the policyholder of an "employer-owned life insurance contract" as defined in IRC Section 101(j) issued after August 17, 2006, to file a return providing certain information. Previously, the Internal Revenue Service issued proposed and temporary regulations with respect to this reporting requirement. On November 5, 2008, the Internal Revenue Service issued final regulations under IRC Section 6039I.

The final regulations did not provide any substantive changes to the prior regulations. Policyholders of "employer-owned life insurance contracts" are still required to file IRS Form 8925 beginning with its 2007 income tax year. IRS Form 8925, "Report of Employer- Owned Life Insurance Contracts," is required to be attached to the policyholder's income tax return by the due date of the return. That Form is required to be filed for any tax year ending after November 13, 2007.

Finally, IRC Section 6039I also requires that each policyholder (or employer) keep such records as may be necessary for purposes of determining whether the requirements of that section and IRC Section 101(j) are met. Interestingly, none of the regulations that have been issued to date by the IRS address this record retention requirement. At the current time, it appears that the IRS does not have any current plans to issue guidance regarding such record requirements.

For more information regarding this topic, please e-mail your requests to Thomas P. Cavanaugh, or call Tom at (248) 457- 7218.

THIS ARTICLE MAY NOT BE USED FOR PENALTY PROTECTION.

On January 16, 2008, the U.S. Supreme Court rendered its unanimous decision in Knight v. CIR, holding that investment advisory fees incurred by trusts and estates are subject to the 2% floor on miscellaneous itemized deductions under IRC § 67(e). Thus, trustee fees and executor commissions (which are fully deductible) must be "unbundled" from investment advisory fees (which are subject to the 2% floor). Prior to the Knight decision, it was common for fiduciaries to bundle these services as part of one integrated fee or commission.

On December 11, 2008, the IRS issued Notice 2008- 16 which announced that trustees and executors do not have to unbundle the investment portion of their fiduciary fees until 2009. Thus, for 2008 and prior tax returns, trustee fees and executor commissions are fully deductible under IRC § 67(e). The Notice was necessary because regulations under § 1.67-4 will not be issued in time for fiduciaries to prepare their 2008 tax returns.

When the Regs are issued, we will report them to you in a future E-Update.

For more information regarding this topic, please e-mail your requests to Julius H. Giarmarco, or call Julius at (248) 457- 7200.

THIS ARTICLE MAY NOT BE USED FOR PENALTY PROTECTION.

	Annual	Semi-Annual	Quarterly	Monthly
Short Term AFRs (Term 3 Years or Less)	0.81%	0.81%	0.81%	0.81%
Mid Term AFRs (Term More Than 3 Years and 9 Years or Less)	2.06%	2.05%	2.04%	2.04%
Long Term AFRs (Term More Than 9 Years)	3.57%	3.54%	3.52%	3.51%
Section 7520 Rate	2.4%