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WEALTH MANAGEMENT

The CARES Act and Your 2020 RMD

Posted by The Axial Company

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The CARES Act suspended the RMD requirement for this year. But what if you already took your required minimum distribution for 2020?

 

You may be able to put the money back into your retirement account.

 

As of June 23, new information has been released from the Internal Revenue Service regarding The CARES (Coronavirus Aid, Relief, and Economic Security) Act, which suspends required minimum distributions (RMDs) for retirement accounts. Those who have already taken a required minimum distribution (RMD) in 2020 from certain retirement accounts now have the opportunity to roll those funds back into a retirement account following the CARES Act RMD waiver for 2020.

 

The 60-day rollover period for any RMDs already taken this year has been extended to August 31, 2020, to give taxpayers time to take advantage of this opportunity.

 

The CARES Act enabled any taxpayer with an RMD due in 2020 from a defined-contribution retirement plan, including a 401(k) or 403(b) plan, or an IRA, to skip those RMDs this year. This includes anyone who turned age 70 1/2 in 2019 and would have had to take the first RMD by April 1, 2020.

 

In addition to the rollover opportunity, an IRA owner or beneficiary who has already received a distribution from an IRA of an amount that would have been an RMD in 2020 can repay the distribution to the IRA by August 31, 2020. The notice provides that this repayment is not subject to the one rollover per 12-month period limitation and the restriction on rollovers for inherited IRAs.

 

The IRS described this change in Notice 2020-51 (PDF) and provides two sample amendments that employers may adopt to give plan participants and beneficiaries whose RMDs are waived a choice as to whether or not to receive the waived RMD.

 

If you have already taken or still plan to take your RMD for this year, please consider reviewing your options with your advisor, as they may have changed given the circumstances surrounding the coronavirus crisis. Please feel free to call us and we will be happy to answer any questions you may have.

 

The Axial Team

 

Information published on https://www.irs.gov pertaining to Notice 2020–51, Guidance on Waiver of 2020 Required Minimum Distributions. IR-2020-127, June 23, 2020.

The accompanying pages have been developed by an independent third party. Commonwealth Financial Network is not responsible for their content and does not guarantee their accuracy or completeness, and they should not be relied upon as such. These materials are general in nature and do not address your specific situation. For your specific investment needs, please discuss your individual circumstances with your representative. Commonwealth does not provide tax or legal advice, and nothing in the accompanying pages should be construed as specific tax or legal advice. Securities and advisory services offered through Commonwealth Financial Network, Member FINRA/SIPC, a Registered Investment Adviser. Fixed insurance products and services offered through Axial Financial Group are separate and unrelated to Commonwealth.

 

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