The CARES Act and
Required Minimum Distributions

Good Afternoon!

We hope this note finds you and those around you safe and healthy during this unprecedented time. You may be aware that the Coronavirus, Aid, Relief, and Economic Security (CARES) Act was recently enacted by Congress. This Act contains provisions that both affect retirement plans and encourage charitable giving by allowing you, as taxpayers, to deduct up to 100% of your adjusted gross income for cash contributions to qualified charities.

We want to make sure you are aware of the waiver of required minimum distributions for 2020 and the options that are available to you, and remind you that we are here to provide any guidance you may need.

We have included below a Retirements Benefits Guide to Required Minimum Distributions that details what you need to know about RMDs and your options for how to approach them in light of these changes. Additionally, we have included a link to CARES Act Retirement Planning FAQ's.

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 mean 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 to an IRA or eligible retirement plan (unless you are a beneficiary who inherited the IRA). This is limited to one 60-day rollover per 12-month period.
  • However, if you took your RMD in January, the IRS has stated that you cannot roll it back to a plan or an IRA, as the 60-day window has passed, and therefore, a January RMD would not be eligible for a rollover.
  • If you took your RMD between Feb. 1 and May 15 you have until July 15 to roll it back.
  • 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.)

We are here to discuss the CARES Act, your RMDs, and any other questions you may have in regards to your financial needs and concerns.

Please stay healthy, and don’t hesitate to contact us if you have any questions or concerns.

S. Andrew Sullivan, CFP®
Wealth Advisor, Managing Partner

Josh K. Schlieman, CFP®
Wealth Advisor, Partner

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.
As always, if you have any questions or concerns, please contact us.
Sullivan & Schlieman Wealth Management, LLC
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