New legislation (The CARES Act) has suspended Required Minimum Distributions for 2020. You indeed can take money from your retirement accounts in 2020, but you are not required to make a distribution this year.
It is important that you let us know if you would like to continue planned distributions or suspend your 2020 RMD by emailing Anne Wheeler at our office.
If you have already taken a distribution in 2020 and wish to reverse it, that MIGHT be possible depending on your specific circumstances. Our staff is happy to answer all your questions on this subject.
It is important to remember that the CARES Act is a relief bill, and by suspending 2020 RMDs, the government is giving up short-term tax revenue to provide relief to retirees. Additionally, markets have been very volatile, and suspending RMDs gives many Americans the ability to leave their investment portfolios alone to recover over the next year.
In addition to the relief these RMD provisions provide, it also opens some planning opportunities.
The bill stated that defined contribution plans, like 401(k)s, 403(b)s, 457(b) plans, and IRAs, may suspend RMDs in 2020. RMDs for 2020 were already a bit lower since 2020 is the first year in which the required beginning date switched from age 70.5 to age 72 – unless someone turned age 70.5 in 2019, in which case they owe an RMD by April 1, 2020. However, the new CARES Act allows account owners to skip both their 2019 RMD if it was their first year and had not yet made an RMD by April 1, 2020, and their 2020 RMD.
Why does skipping RMDs in 2020 matter? For most people, their IRAs and 401(k)s are funded with tax-deferred dollars. Once the SECURE Act passed in 2019, account owners had to start taking out mandatory, taxable distributions from their retirement accounts at age 72.
With many Americans struggling in 2020 because of the pandemic, having more flexibility on distributions can be beneficial. And since the markets have been extremely volatile, giving retirement portfolios another year to recover can be helpful.
Please call our office with any questions on how this relates to you. You may also email our team member, Anne Wheeler, with any questions or suspension plans regarding your RMD.
Anne Wheeler Email: awheeler@fscadvisor.com
Be Well,
Cathy Wagner & Team
Source: https://www.forbes.com/sites/jamiehopkins/2020/03/30/cares-act-drastically-changes-required-minimum-distribution-rules-for-2020/#404e80319a07