The CARES Act (Coronavirus Aid, Relief, and Economic Security Act) provides for many types of relief to individuals and businesses. One such relief allows participants and beneficiaries to forego taking 2020 RMD’s (Required Minimum Distributions). RMD’s are generally required from retirement plans after reaching age 70 1/2 or age 72. (The required beginning date changed with the SECURE Act to age 72 beginning in 2020).
This waiver includes those who reached age 70 1/2 in 2019 and chose to wait until 2020 to take their first RMD. This provision is limited to defined contribution plans and IRA’s. It does not apply to 457(b) plans of tax-exempt organizations. Nor does it apply to Defined Benefit Plans.
If a participant or beneficiary already took an RMD in 2020, they have the opportunity to “reverse” the transaction by rolling the Distribution amount back into a retirement plan or IRA, thereby avoiding the tax consequences during 2020. The deadline to roll it back into a plan or IRA is August 31, 2020.
For more information, please contact BWTP.