CARES Act Suspension of Required Minimum Distributions

CARES Act Suspension of Required Minimum Distributions

In March, the President signed the Coronavirus Aid, Relief, and Economic Security (CARES) Act. Designed to sustain and stimulate the economy, it temporarily suspended required minimum distributions (RMDs) for retirement plans.

Normally, you must withdraw a certain amount from you tax-sheltered retirement accounts when you are age 72 or older. This suspension applies to all RMDs due in 2020, including leftover 2019 distributions that were required to be paid by April 1, 2020, IRAs (traditional, SIMPLE, SEP, and inherited) and defined-contribution retirement accounts, including 401(k)s, 403(b)s, the federal Thrift Savings Plan and government 457(b) plans are all eligible for this suspension. It does not impact defined-benefit plans, tax-exempt 457 plans or Roth IRAs, which don’t have required minimum distributions.

If you already withdrew the required amount, you have until this Monday, August 31st  to return the funds to the original account from which they were withdrawn.

Returning the funds will reduce your taxable income for 2020 and may allow for tax planning opportunities such as ROTH conversions.

Please contact us if you have any questions, concerns, or need advisement during this unprecedented time. You can also check our Coronavirus Resources Page for more updates.