New law provides relief from IRA distribution in '09

Key Points

Under the newly passed act, there is no RMD for the calendar year 2009 from IRAs, retirement annuities, or employer-provided defined contribution retirement plans. Distributions, however, will be required again in 2010 and beyond, assuming there are no other changes or modifications within the act.

The act is also beneficial to those who have other investments and would prefer not to pay taxes on IRA distributions they don't need.

The relief provision will not help a taxpayer who attained age 70½ in 2008, but chose to delay his first minimum distribution for 2008 until April 1, 2009. That individual still must take that first distribution by April 1, 2009, but will not have to take the regular required minimum distribution for 2009.

Q I have been researching various disability insurance policies and understand the importance of having a policy that covers me specifically if I cannot work as a urologist. What other important elements of the policies should I be comparing?

A Other than the specific disability definition used within the policy, there are other important features and provisions that need to be examined and compared. "Partial" or "residual" disability benefits may be paid in some policies when the specific disability impairment allows the insured to perform only a portion of his/her duties. This provision may also pay benefits in the event the disability reduces the insured's income by a certain percentage of the pre-disability amount.

Another important provision deals with the ability to cancel and renew the policy. "Non-cancelable" generally means that the insurance company cannot cancel the policy, change the policy provisions, or increase the premiums after the policy is issued, and the premiums are paid on time. "Guaranteed renewable" is similar in all aspects, except that the insurance company has the ability to increase the premium amount. Another provision, typically added as an additional cost rider, is the cost of living adjustment. This rider provides an inflation-adjusted monthly benefit in the event of a disability claim.

Of course, the more guaranteed provisions included in the policy, either as part of the original policy or as a rider, the higher the premium. Fortunately, there are a variety of ways to construct a policy so that you have greater control over the ultimate premium amount. The first is the monthly amount of the benefit. Unfortunately, a disability insurance policy does not enable you to replicate your income. Generally, you can purchase up to 60% to 66% of your current income with a set dollar amount maximum, as the insurance companies do not want to give you an incentive to make a claim.

Next are the "waiting" and "elimination" periods, which control how long you must be disabled prior to receiving benefits, similar to a deductible, but based on time, not dollars. Commonly available periods include 30, 60, 90, 180, and 360 days. The longer the selected period, the lower the premium payment amount will be.

The other major cost factor is the "benefit period." This decision will determine how long the benefits will be paid after the periods have been satisfied and the disability continues.

If you are a solo practitioner or a member of a small group practice, you also may want to investigate the benefits of a disability business overhead expense policy. This unique type of insurance helps cover expenses such as staff salaries, office rent, malpractice insurance, and others needed to keep one's practice operating in the event of a physician's disability.

Joel M. Blau, CFP, is president and Ronald J. Paprocki, JD, CFP, CHBC, is chief executive officer of MEDIQUS Asset Advisors, Inc. in Chicago. They can be reached at 800-883-8555 or blau@mediqus.com
or paprocki@mediqus.com
.