25 Jun 20200 Comments
As part of the Coronavirus Aid Relief and Economic Security (CARES) Act of 2020, Required Minimum Distributions (RMDs) for Individual Retirement Accounts and 401(k)s have been suspended for calendar year 2020.
The Secure Act, which became law this year, had already reset the age that RMDs needed to be taken: from 70 1/2 to 72. Now, with the CARES Act, retirement plan owners do not have to take their RMDs if they are not in need of that income and can now avoid the taxes on that money. This is a repeat of the 2009 RMD holiday during the Great Recession.
Children, grandchildren and others who have inherited IRAs (pretax IRAs and Roth IRAs) must take annual withdrawals regardless of their own age. but they too get an RMD holiday for 2020.
If you’ve already received a distribution this year from your own IRA or one inherited from a spouse, you can roll it back into your IRA within 60 days of receipt.
Before putting your RMDs on hold, you may want to look at your tax bracket and get money out at low rates, especially since it’s likely that tax rates are going to go higher to address the drastic increase in the U.S. deficit.