CARES Act waives your Required Minimum Distribution for 2020

When the market has had big losses in the past, policy makers have stepped in and changed requirements for retirement accounts. Why? It is a way to keep our retirees’ livelihood sustained longer.  The government would rather implement a stopgap now.  It is a measure to keep you from going on governmental assistance later in life because you’ve overdrawn your investment in a down market.

When the CARES Act rolled out at the end of March 2020, Required Minimum Distributions (RMDs) were officially waived for 2020.  This means you do not need to take a distribution this year. This applies to IRAs and Inherited  IRAs.

We often encourage our clients to establish an automatic required distribution. If this is you –depending on your individual situation you may want to skip this years RMD and allow your account to better recover as the market bounces back.

What you can do now?   Contact us if any of the following apply to you:

• Let’s say you have already begun your RMD for 2020. However, you do not really want it. You are able to return it to the account.
• You have an automated RMD scheduled, and you would like to cancel it.

Other investment account accommodations made in the CARES Act include:

• Waiving the 10% early withdrawal penalty on retirement accounts for “coronavirus-related” distributions up to $100,000.
• Extending 401(k) loan provisions – by increasing the amount that is eligible for distribution and extending the payback period
• For any account in a required five-year distribution window, 2020 will be discluded.