Industry News: Required Distributions Suspended for '09

Second, taxpayers who turned age 70.5 in 2008 must still take their initial distribution by April 1, 2009, based on the account balance of December 31, 2007.

"The requirement doesn't change," says Adelman. "People who had to take their first distribution in 2009 will still need to do that."

Still, advisors are reacting favorably to the recent change. Adelman says her clients, of whom 25 percent are over age 70, have been concerned about the prospect of selling positions at a loss from their accounts to meet the RMD.

Ken Robinson, senior planner with the Monitor Group in McLean, Va., estimates that roughly half his firm's clients are 70.5 or older.

Many of his older clients don't need income from their retirement plans and welcome the opportunity for another year of tax-deferral. "For the client that doesn't actually need the money, what we end up doing is simply shifting the money from the IRA account to a regular non-retirement account, and that's it — it stays within their long-term portfolio," says Robinson.

"But we've had to move the money out of the IRA because of the required minimum distribution rule, and they have to pay tax on it," he explains. "So for those people that don't actually need the money, this will be a good year, because they can avoid having to make that distribution and pay the tax for 2009."

Robinson notes that the change gives advisors and clients additional planning flexibility. He cites cases in which a client has large Schedule A deductions. Even though the client isn't required to take a distribution for 2009, Robinson says, he might recommend a distribution to absorb those deductions.