The CARES Act has changed many things, and one thing that investors might need to know about is the changes it has brought to the Required Minimum Distribution rules for those with IRAs, 401 (k) plans and other qualifying accounts.
In 2020, there were already changes coming to RMDs. Namely, that the age for being required to take them was increasing from 70 ½ to 72 years old. What was supposed to happen, before the coronavirus (COVID-19) hit, was that those who turned 70 ½ in 2019 were to take their first RMD by April 1, 2020. However, the Coronavirus Aid, Relief and Economic Security Act, or CARES Act, was signed into law in late March 2020.
So, what does that mean?
Because of the CARES Act, you can waive the Required Minimum Distribution in 2020 – with some exceptions. Distributions will resume in 2021. Of course, you can take your RMDs if you want or need the income.
For those who don’t need the money, waiving your RMDs can save you from taxes on accounts that have already taken a hit due to the economy and the coronavirus-related fallout.
If you already took your RMDs, you might be wondering if you have options. The answer is, yes! Your Required Minimum Distributions can be returned, so to speak, in a few ways.
This all has to be done within 60 days of taking the money, though, and it can’t be done from an inherited IRA. You can also do it only once!
It’s best to talk to a qualified financial advisor about your options so you can make the best decision about how to take your RMDs – or not.
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