Thoughts on Law and Life

The Official Blog of Astrab Legal Services LLC

IRA Confusion Regarding 2009 RMDs

Good Evening! Its been a busy few days, so I’m going to borrow again and post an article that appeared in today’s Wall Street Journal regarding a topic that has generated much interest – the new IRS ruling allowing investors to forgo required mandatory distributions from IRA accounts in 2009. There is much confusion out there, and this article does a pretty good job of touching base on some areas of concern:

New IRA Law Bewilders Investors

Break From Mandatory Withdrawals, Meant to Protect Savings, Leads to Mixups, Ad Hoc Responses; ‘It’s All So Confusing’


A new law that was intended to give retirees and their battered nest eggs some relief is causing aggravation instead.

Owners of individual retirement accounts and 401(k)s who are over age 70½, and those who have inherited such accounts, must withdraw a minimum amount from those accounts each year, based on their life expectancy. In December, lawmakers suspended that requirement for 2009, hoping to give investors a chance for their accounts to rebound after a brutal year in the markets.

Yet that seemingly simple idea — a one-year reprieve from mandatory withdrawals — is giving headaches to investors, financial planners and retirement-plan custodians. Retirees are getting mixed signals from IRA custodians and other retirement-plan administrators about how to go about suspending withdrawals — and whether they’re even allowed to do so. Administrators of 401(k) plans are worried that the participants in their plans may not be allowed to suspend their withdrawals, and say that the Internal Revenue Service and Treasury Department have yet to provide adequate guidance.

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.

“It’s all so confusing,” says Connie White, a 73-year-old retiree in Plainfield, Ind. “You have to stay on top of it.” She and her husband Paul, also 73, received a check from an IRA annuity that they had set up to generate automated payments before they thought to call to change the amount.

The Whites sought help in late January from their accountant, Martin James. Three days later, Mr. James got an email from the couple’s IRA custodian, Lansing, Mich.-based Jackson National Life Insurance Co., explaining how customers like the Whites could suspend their payments. With financial advisers’ help, Jackson National is working with customers whose automated payments already went out to return any unwanted withdrawals, says John Koehler, the company’s vice president of retirement and wealth strategies.

Some retirees, like the Whites, aren’t waiting for their IRA custodians to contact them first. But consistency is in short supply. ING Groep NV’s U.S. operation at first told IRA owners that it would continue to pay distributions that had been set up on a systematic schedule. Recently, though, the company said that, instead, it will suspend such payments unless customers ask to continue them.

“The legislation was not yet signed by the president when we issued a preliminary communication,” ING said. “Once the law was signed, we … concluded that this was the best way to be compliant and serve our customers.”

Security Benefit Corp., based in Topeka, Kan., stopped payments to IRA owners who withdraw only the required minimum each year, but it has continued payments to those who take out larger amounts. “We suspect that those people [who take out more] are probably living off that income, so we are not going to turn those withdrawals off,” says Thomas Granger, sales director to qualified plans at Security Benefit. In January, a “handful” of customers got distributions they had intended to skip this year, he says.

Gloria Guth, a 73-year-old retiree in Coconut Creek, Fla., called her IRA custodian, TIAA-CREF, in early January to see if she could take half the amount normally required. The answer, she says, was “no, or maybe.” Later, when she asked again, she was told she could do so. A TIAA-CREF spokesman says its call center handles 12,000 clients a day, “and we strive for all of those conversations to help enhance our customers’ financial security.”

The rules for 401(k)s and other workplace-sponsored retirement plans can be even murkier. Some 401(k) plans — for the moment, at least — are still requiring participants to make withdrawals. The reason: Plan sponsors have to get the documents governing their plans approved by the federal government, and some fear that allowing any suspension of payments will violate those documents. Others worry that suspending systematic payments will run afoul of their plans’ governing language.

As such, administrators are trying to figure out whether they first have to amend their plan documents, and get those amendments approved by the IRS, before they can suspend withdrawals.

“There’s confusion over whether amendments are necessary, whether you can continue payments unless the retiree opts out, or stop the payments unless the retiree opts in,” says Jan Jacobson, senior counsel for retirement policy at the American Benefits Council, a Washington, D.C., trade group.

On Friday, the council sent a letter to the IRS and Treasury Department asking for guidance on how plans can suspend distributions and how retirees who already received unwanted payouts can put them back without penalty. (People age 70½ and older who are still working aren’t required to take distributions from their current employer’s retirement plan.)

The good news: The majority of 401(k) distributions don’t go out until later in the year, “so there is time to wait for clarification,” says Terri Hale, a spokeswoman for Principal Financial Group in Des Moines, Iowa, an IRA custodian and 401(k) administrator. (Account owners who have already received payments can roll them into an IRA and possibly back into their 401(k) or other tax-deferred account, as long as they do so within 60 days.) Principal is joining with industry trade groups in asking the Treasury Department to streamline the “administrative burden” involved in suspending retirement-account withdrawals, Ms. Hale says.

Financial planners are urging investors to keep the following points in mind:

Don’t wait to hear from your IRA custodian or 401(k) administrator. If you wish to suspend distributions in 2009, or ensure delivery of payments, contact your plan and ask what steps, if any, are required.

Similarly, ask whether you will need to submit a request in 2010 — after the law authorizing the one-year suspension expires — to get automatic distributions started again. Some companies say they plan to resume distributions; others will require written requests.

If you do suspend retirement-account withdrawals this year, you may want to roll traditional IRA assets into a Roth IRA. Of course, you’ll have to pay income taxes on the amount you convert. But Roth IRAs have no required distributions and generally no tax on future earnings.

Are you the beneficiary of a trust that holds an inherited IRA? If the trust instructs the trustee to pay you only the “required” IRA distribution, you may get nothing this year, says Natalie Choate, an estate-planning attorney at Nutter McClennen & Fish LLP in Boston. If you need the money, see if the trust authorizes the trustee to pay you “additional amounts in the trustee’s discretion.”

If you were supposed to take your first distribution in 2008, and you waited to do so in the three-month grace period that ends April 1, you still have to make the withdrawal (and pay any tax due). But if you turn 70½ in 2009, you’re off the hook for your first-year withdrawal, and would have to make your second-year withdrawal by Dec. 31, 2010.


February 11, 2009 Posted by | Financial, Law, Legal, Life, sales & marketing, small business | , , , , , , , , | Leave a comment

25 Random Facts about Computers and the Tech Sector

Well, it is Sunday and I’m feeling lazy (actually I have some business-related work to do), so I’m going to post up an interesting article from John Dvorak at Enjoy!


25 random facts about computers, tech sector

By John C. Dvorak

Last update: 1:26 p.m. EST Feb. 7, 2009

SAN FRANCISCO (MarketWatch) — There’s some wild fad going on in the Facebook realm where you list 25 random facts about yourself or about something you are involved with. Yesterday it crept into the New York Times sports page. Everyone is doing it and if you Google “25 random facts” you get 32,000,000 hits. I’m on it with this list!

  1. The first personal computer was the Berkeley Enterprises “Simon” which sold for $300 in 1950.
  2. Seagate Technology (STX) was originally named Shugart Technology.
  3. The precision quartz clock in a computer cannot keep accurate time.
  4. Windows was originally named Interface Manager.
  5. IBM (IBM) , which stands for International Business Machines, was an exaggerated name derived from NCR, National Cash Register.
  6. Floppy disks in the late 1970s were 8 inches in diameter.
  7. The VIC-20 computer from Commodore sold for $299 in 1980 with 5K of RAM.
  8. The world’s first one gigabyte disk drive was announced in 1980. It weighed 550 pounds and had a price tag of $40,000.
  9. Many consider the Burroughs B-5000 (circa 1955) to be the single greatest computer ever designed.
  10. IP means both Internet Protocol and Intellectual Property. Thus when you say a company is involved with IP, nobody will know what you are talking about.
  11. The ticker symbol for Sun Microsystems (JAVA) was changed from SUNW to JAVA and the company has been struggling ever since.
  12. SanDisk (SNDK) used to be called SunDisk.
  13. Apple (AAPL) popularized the laser printer.
  14. Adobe Photoshop (ADBE) was originally called Display, then ImagePro. It was not developed by Adobe, but licensed from a college student named Thomas Knoll in 1988.
  15. Ink jet ink costs $5000 per gallon.
  16. The precursor to today’s GPS car navigation system was released in 1985. It was the ETAK Navigator and used a computer with a dead reckoning program to navigate.
  17. Intel’s (INTC) first microprocessor was the 4004. It was designed for a calculator, nobody imagined where it would lead.
  18. SCO, the company that sold a version of Unix, used to be called the Santa Cruz Operation.
  19. Computers should be turned off at night.
  20. Peter Norton of the fabled Norton anti-virus program once said that there was no such thing as a computer virus and considered the whole idea some sort of hoax.
  21. “Modem” means modulator/demodulator. This referred to the modulation and demodulation of an analog signal to make it digital. By this definition the device called a cable modem is a misnomer. It should be called a network adapter.
  22. Dell Inc. (DELL) was originally called PCs Limited.
  23. The Apple 1 was the first computer developed by Apple and was nothing more than a bag of parts. The Apple II was the first finished product sold by the company.
  24. Lenovo (HK:992news chart profile ) means “new legend” — “Le” for legend and “novo” for new.
  25. In the 1950s computers were commonly referred to as “electronic brains.”

    Fun, huh? 

February 8, 2009 Posted by | Life, sales & marketing, small business | , , , , , | Leave a comment

Add Value Everyday

When I first started this blog I intended to simply write on legal issues. Taking into consideration today’s environment, however, it has morphed more into a forum on building and maintaining your business. Small business owners face huge challenges, not only from corporate competition, but also from lack of consumer liquidity, overdue accounts payable and rising costs all around. I want to offer tips and open discussions on ideas to help small business owners move forward in this economy. In addition, my firm is putting together a small business consulting practice to provide essentially a team of experts to act as a guide to business owners in all areas, including but not limited to business planning, marketing, taxes, cash management and, of course legal issues. If you want a consultation, please contact me at (216) 577-0013.

Today’s topic is on adding Value. This applies to both existing and prospective customers/clients. It is uber-critical to keep our existing customers and the best way to do that is to go overboard with customer service and attention. If you normally take a week to get a job done, do it in half the time if possible. Return phone calls immediately. Start an e-newsletter and e-mail campaign on topics not only related to your business but also to big current event issues of the day. The goal is to keep the customers engaged and maintain ‘top-of-mind’ awareness of your company amongst those customers. This will not only maintain your current base, but hopefully will grow referral opportunities.

As to prospective customers, keep pushing and make every effort to bring them on board. Always be moving, within reason, towards the sale. Offer them a door into your business by including them on your customer mailings or set up a breakfast/lunch meeting if you feel that it might help close the business. Always return their phone calls as soon as humanly possible. Understand that you are not the only business looking to bring them on board and seek avenues to place yourself above the competition.

There are many, many ways to add value to your customer/client relationships, and the methods vary from industry to industry. The bottom line is that you need paying customers in order to stay in business, so start thinking outside of the box to keep and obtain those customers.

Michael K. Astrab is the principal attorney for Astrab Legal Services LLC, a general practice law firm located in Cleveland, Ohio. He may be reached at (216) 577-0013 or via e-mail at This blog is designed for informational purposes only and does not constitute legal advice.

February 4, 2009 Posted by | Financial, Law, Legal, Life, sales & marketing, small business | , , , , , , , , , , , | Leave a comment

Small Business SWAT Team

I have come up with a new element to my law practice. Given the current state of the economy and the strain that financial worries are placing on the bottom lines of many companies, I am in the process of organizing a small business ‘SWAT Team’ to assist business owners facing an uncertain future.

I am putting together an inter-disciplinary team of at least a CPA, Financial Advisor and Banking/Lending specialist to give advice to business owners. Following the holistic approach that my practice takes, I want to take a look at everything in the business – from the balance sheet to the business/marketing plan. We will be looking for opportunities to save money, either through cutting expenses or possibly renegotiating leases, as well as opportunities to grow the business through new marketing approaches or suggestions on lead generation, client retention ideas or new approaches to networking. An audit of the business may find new ways to save on taxes and the structure of the business will be analyzed to determine whether or not the creation of a new corporate entity may be in the owner’s best interest. If there are outstanding accounts payable we can discuss stepping up collection enforcement or renegotiating repayment terms in order to bring those accounts current.

My goal is to keep small businesses in business. Small business owners are the lifeblood of the new economy and must be given every opportunity to succeed. I want to use my practice to assist and am looking for any small business owners who may be interested in sitting down for a free initial consultation. I can be contacted at (216) 577-0013 or via e-mail at

Michael K. Astrab is the principal attorney for Astrab Legal Services LLC, a general practice law firm located in Cleveland, Ohio. He may be reached at (216) 577-0013 or via e-mail at This blog is designed for informational purposes only and does not constitute legal advice.

February 1, 2009 Posted by | Financial, Law, Legal, Life, sales & marketing, small business | , , , , , , , | 2 Comments

Create Your Own Economy!

In perusing today’s headlines, all I see are stories about job cuts – Home Depot, Caterpillar, Sprint, Phillips, etc… The gist of the stories is that the economy is still slowing and that these companies need to swing the axe in order to accommodate the slowing demand. Most folks who read these stories will adopt a ‘woe is me’ attitude towards their situations and wait for the axe to drop on them.

As I’ve mentioned in prior blogs, I often listen to the podcasts available through the Morning Coach. The host is always preaching about ‘creating your own economy’ and not relying on the whims of our employers. I am in absolute agreement with this philosophy and urge all of you who can get out there and either do it on your own or work on a side business to do so! This won’t work for everyone, but it is essential that we adopt a strong sense of personal responsibility and get out there and work for ourselves. It requires a strong work ethic, a willingness for short-term sacrifice and an ability to see the big picture. I am not waiting around for the shoe to drop on my career – I am moving forward with my private practice and understand that, although it will be tight at first, I am opening up a whole new world for myself and my family by giving myself the ability to create my own schedule, collect my own fees, select my own clients and decide the scope of my practice without someone telling me that I need to sell X, push Y or run everything through an anal-retentive compliance system. If I want to blog on a topic, by God I’m going to do it without having to worry about upsetting my corporate masters. If I want to change the direction of my practice midstream and move into more estate planning versus felony defense I want the power to do it without having to sell the idea to a manger or partner.

The bottom line is that there is an entrepreneur in each of us screaming to come out. If you are sitting at your desk refreshing over and over again to see the next economic shoe to drop you need to stand up and scream “ENOUGH!” Get out there and explore how you can use your education, training and business sense to build a consulting business, open a coffee stand or do whatever the heck you’ve been daydreaming about for the past ten years.

Obviously I’m not advocating just walking away from your day job this afternoon – map out your plan, get buy-in from your significant other, run your ideas past trusted peers and make sure that you are financially able to get the business off the ground with little to no outside financing. If you believe that you can do it, keep that mindset and get out there and get started!

Some Quick Tips:

  • Do some market research before jumping in – make sure that there is a need for what you want to do.
  • Create a unique ‘value proposition’ that differentiates you from the competition.
  • Seek out constructive criticism – ignore the naysayers.
  • Speak to a financial advisor, CPA, insurance agent and/or a business attorney to make sure you are financially able to undertake the venture and that you are crossing the T’s and dotting the I’s.
  • Develop a detailed business plan and set reasonable/measurable goals for yourself.
  • Maintain a positive mental attitude – Don’t lose sight of the goals that you set for yourself!

Now get out there and do it! Create your own economy and don’t look back!

Michael K. Astrab is the principal attorney for Astrab Legal Services LLC, a general practice law firm located in Cleveland, Ohio. He may be reached at (216) 577-0013 or via e-mail at This blog is designed for informational purposes only and does not constitute legal advice.

January 26, 2009 Posted by | Financial, Law, Life, sales & marketing, small business | , , , , , | Leave a comment

Competence, Consistency & Character (Part II)

As I sit about an outbound train watching the Cleveland skyline fade off into the snowy distance, I wonder how this once fine city and region has fallen so hard and fast. I believe part of the answer is consistency of its leaders. We have an elected body, both on the city and county level, that does not seem to know how to run a hot dog stand let alone a major metropolitan area. We keep hearing promises but there is never follow through or we let seemingly beneficial projects slip away due to inattention or outright incompetency. We need leaders who offer us proposals, work those proposals to their completion and present a finished product to the citizens that will help us to move forward as a region.

Consistency is the key to getting things done, attracting new customers/clients and moving forward as an individual or business owner. If a client is told that the project will be done Tuesday, it better darn well be done. If you tell clients that a weekly newsletter will be sent out to them, that newsletter should arrive as promised or confidence will begin to wane on the part of those with whom we do business. On the personal side, if we promise our kids that we will set aside time each week to go out to eat or play in the park it is critically important that the schedule be maintained as promised.

In life and in business, consistency is the key to getting noticed and appreciated. It is an absolute turn-off to deal with someone who cannot seem to have any consistency to their lives. If we can show our business and life partners that we are capable of maintaining consistency in our dealings, we will see definite benefits.

How can we be more consistent?

  • Get organized – consistency is the direct result of an organized life. Get a calendar…in fact get two calendars – one online or on a phone with pop-up reminders and access to critical information and one on paper that can be carried throughout the day. Putting things in our calendars serves as a visible reminder of your duties and obligations. Once you have the calendars, make it a habit to update them and check them several times throughout the day. It is useless to have them if they are not referred to several times a day!
  • Do not over-extend yourself – don’t over-schedule your time or take on tasks for which you are unprepared or unable to handle. Don’t be afraid to say ‘no’ to something if you believe it will cause you to delay an existing project or might not get done in the required time frame due to those existing projects.
  • Let others know your schedule – make sure that others know your commitments and allow them to serve as a ‘bully’ on your time to get things done. If you are slacking, a not-so-gentle reminder from your assistant or spouse about a deadline fast approaching may be the difference in getting the job done or failing.
  • Get up early – our mind’s most active time is early in the morning. A quiet and empty office is a great place to get things done free of distractions.
  • Set aside dedicated ‘work’ time – make sure that those around you know that you are not to be disturbed unless an emergency arises during the time frame that you set aside. Be anti-social and just get the work done that needs finishing!

These concepts may seem very Business 101 but far too often are simply ignored in real life due to the pressing concerns of our daily commitments. Try to remember that consistency is the key to long-term success and respect!

Michael K. Astrab is the principal attorney for Astrab Legal Services LLC, a general practice law firm located in Cleveland, Ohio. He may be reached at (216) 577-0013 or via e-mail at This blog is designed for informational purposes only and does not constitute legal advice.

January 20, 2009 Posted by | Financial, Law, Legal, Life, sales & marketing, small business | , , , , , , | Leave a comment