Monday, March 30, 2020
Congress Suspends Required Minimum Distributions for 401(k)s and IRAs for 2020, Opening Window to Tax Savings
The bipartisan COVID-19 stimulus bill recently signed by President Trump includes welcome tax relief for retirees: The required minimum distribution (RMD) rules for Individual Retirement Accounts and 401(k)s are waived for 2020. This is the same as what occurred in 2009 during the Great Recession. For retirees, this means that instead of taking money out of their IRA this year, their investments can continue to grow.
Of course, for retirees that depend on their RMD to pay for expenses, the waiver is moot. For others, there may be benefits to still take some money out. Ed Slott, a CPA and IRA expert in Rockville Centre, New York, says “There are opportunities here. You might want to look at your tax bracket and get money out at low rates. If anything is obvious, it’s that tax rates are going to go higher.”
The rules for who was required to take 2020 RMDs were already altered because of the SECURE ACT, passed in late December, which changed the age triggering RMDs from 70 ½ to 72, effective January 1, 2020. Children, grandchildren and others who have inherited IRAs (pretax IRAs and Roth IRAs) must take annual withdrawals regardless of their own personal age. If you have already received a distribution from your own IRA or one inherited from a spouse for 2020, you can roll it back into your IRA within 60 days of receipt.
See Ashlea Ebeling, Congress Suspends Required Minimum Distributions for 401(k)s and IRAs for 2020, Opening Window to Tax Savings, Forbes, March 27, 2020.
Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.