CARES Act - Changes Affecting Retirement Accounts and RMDs

On March 27, 2020, President Trump signed the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”). Among the many provisions and effects of the CARES Act are the following as they relate to retirement accounts and IRAs:

  • The temporary suspension of required minimum distributions (“RMD”) from most retirement plans for the year 2020.
    • It is also important to note, those individuals who were required to begin their RMD in 2019 and had up until April 1, 2020 to begin making those distributions, can benefit from the CARES Act and suspend those RMDs as well.
    • For individuals who took a RMD from an IRA or 401(k) within the last 60 days, they can do a 60-day rollover to an IRA and not have it treated as a taxable distribution in 2020.
    • Different rules may apply to inherited retirement accounts and plans.
  • For qualified individuals affected by the current pandemic, the CARES Act also waives the 10% early withdrawal penalty tax for those who take retirement distributions prior to age 59.5 up to $100,000.
    • In addition, the CARES Act provides that those distributions can be repaid within three years to avoid taxation.

For more information on the topic discussed, contact:

04.03.2020  |  PUBLICATION: Other Publications  |  TOPICS: Estate Planning

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