News You Can Use: House approves bill to change 401(k) distribution rules

The House last night passed legislation that would temporarily suspend the tax on seniors who fail to take a required minimum distribution from their retirement accounts at age 70 1/2. Under the bill, seniors would not have to tap retirement assets during 2009.

Under current law, seniors must annually withdraw a minimum amount from their retirement accounts, based on their life expectancy and retirement balance from the previous year. Not taking the distribution subjects seniors to a tax penalties.

Among the bill's other provisions are relief for cash-strapped employers who need to make high contributions to pension plans to meet Pension Protection Act requirements, which state that plans must be 92% funded for 2008 and 94% for 2009. Failing to meet that funding mark would force plan sponsors to fully fund plans immediately. The House bill would only force companies to meet the 92% funding level.