RMDs Waived for 2020
-2019 RMDs due by April 1st, 2020 (If delayed to January 1, 2020 or later)
-2020 RMDs from company plans and IRAs
-2020 RMDs for plan, IRA and Roth IRA Beneficiaries
-RMDs taken this year can be undone if they are eligible to be rolled over. To be eligible:
-Must be within 60 days.
-There must not have been an IRA-to-IRA or Roth IRA-to-Roth IRA rollover in the 12 months preceding receipt of the 2020 RMD.
Planning option: If the distribution is still within 60 days, but there was an IRA-to-IRA rollover within the preceding 12 months, then a Roth IRA conversion is possible. (Roth conversions don’t count for the once-per-year rule.)
-Non-spouse beneficiaries cannot undo RMDs already taken.
Voluntary distribution options: RMDs are “minimums” only
-Roth conversions
-QCDs (Qualified Charitable Distributions). The QCD age is still 70.5, even though the SECURE Act raised the RMD age to 72.
Attention!
Coronavirus-Related Distributions
CRDs are any distributions from a company plan or IRA made anytime during 2020 to affected individuals.
Who are affected individuals?
-Those diagnosed with the virus.
-Those whose spouse or dependents are diagnosed.
-Those who experience adverse financial consequences as a result of:
-Being quarantined
-Being furloughed or laid off, or having work hours reduced due to the virus.
-Being unable to work due to lack of childcare.
-Closing or reducing hours of a business owned or operated by the individual due to the virus, or “Other Factors” to be determined by the Secretary of the Treasury.
Retirement relief available:
-The 10% penalty is waived on up to $100,000 of 2020 distributions from IRAs and company plans (aggregated) for coronavirus-related distributions.
-The tax would be due, but could be spread evenly over three years, and the funds could be repaid over the three-year period.
-Affected individuals who are over the age 59.5 (not subject to the 10% penalty) can still take advantage of the three-year income tax deferral and payback.
Plan Loan Relief:
-For affected individuals, the maximum amount of plan loans is increased to the lesser of $100,000 (reduced by other outstanding loans) or 100% of the account balance. (Normally, the lesser of $50,000 (reduced by other loans) or 50% of the account balance)
-This relief applies to loans taken by September 23rd, 2020.
-Any loan repayments normally due between March 27th, 2020 and December 31st, 2020 could be suspended for one year.
-Loans are NOT allowed from IRAs.
If you need help understanding these changes and how they apply to you please email us at info@commonfinancialsense.com
