As you may have heard the Coronavirus Aid, Relief, and Economic Security (CARES) Act was recently signed into law. This was put into place to provide assistance to those most impacted by the COVID-19 pandemic. Did you know the act includes some key provisions that may also benefit retirees?
The CARES Act has far-reaching implications for many, if you would like to learn more about the compents of the act, click the link under "Attachments" at the end of the blog. I am only going to discuss the option that allows you to suspend your Required Minimum Distributions (RMDs) from your retirement accounts and IRAs. RMDs are minimum amounts that a retirement plan account owner must withdraw annually, starting with the year that he or she reaches 72 (70 ½ if you reached 70 ½ before January 1, 2020).
The CARES Act suspends the RMDs most people must take from retirement plans and IRAs in 2020. People who have an inherited or beneficiary IRA can suspend distributions in 2020 as well. Required distributions don’t apply to people with Roth IRAs, although they do apply to investors who inherit Roth IRA accounts.
Still need to withdraw funds from your retirement account? You are able to withdraw funds as long as you are over age 59 1/2, no changes there. Withdrawals will be taxed at your income tax rate.
Already taken your RMD for 2020? Technically, the distribution can’t be reversed. However, the CARES Act allows you to re-contribute the funds back into your retirement account within 60 days and to be considered a rollover. This can be confusing, so if you have any questions contact us.