Retirement Benefits Guide to Required Minimum Distributions
What you need to know
The CARES Act waives all required minimum distributions (RMDs) from retirement accounts for 2020. This includes traditional IRAs, SEP IRAs, and SIMPLE IRAs, as well as 401(k), 403(b) and Governmental 457(b) plans. They do not need to be made up next year.
What does it mean?
This means that, as a retirement account owner or a beneficiary taking stretch distributions, you can leave your retirement accounts alone for another year, allowing your accounts the time to recover.
Additionally, if you are at least age 70 ½, the Qualified Charitable Distributions (QCDs) allow you to send up to $100,000 from an IRA to a qualified charity and have that amount offset any RMDs for the year and not be treated as a taxable distribution.
Note: Since the required date for RMDs is 72, if you use a QCD at age 70 ½, you would not be able to offset any RMDs because none are owed yet.
What can you do?
- If you already took your RMD, it can be rolled over or re-contributed to an IRA or eligible retirement plan. This is limited to one 60-day rollover per 12-month period. ***
- If you won’t need your RMDs, now is an ideal time to suspend your RMDs for 2020.
- If there’s an agreement or schedule established, you, as the beneficiary should notify the custodian that you don’t to take the RMD this year. (It never hurts to notify the custodian of your intent, regardless of existing arrangements.)
*** The 60-day rollover period for any RMDs already taken this year has been extended to August 31, 2020, to give taxpayers time to take advantage of this opportunity. This applies to all RMDs taken in 2020. The IRS described this change in
Notice 2020-51 (PDF)
, released June 23
. The Notice also answers questions regarding the waiver of RMDs for 2020 under the Coronavirus Aid, Relief, and Economic Security Act, known as the CARES Act.
This material was prepared by LPL Financial.
This information is not intended to be a substitute for specific individualized legal or tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.
Mike Kasecamp, CPFA, QKA
Vice President, Director of Trust & Investment Services
CNB Investment & Planning Services
101 South Washington Street | P.O. Box 130 | Berkeley Springs, WV 25411
304-258-7382 Office | 301-708-1138 Cell | 304-258-3637 Fax