April 2 2020
By Daniel P. Doyle – Fellow, G&A Institute
Information that individuals can use if they are in the age bracket where they are required to make withdrawals from their IRA accounts, or if they are approaching the age for minimum withdrawals. The coronavirus crisis has resulted in rule change.
The Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was signed into law on 27 March. Section 2203 of that Act suspends the Required Minimum Distributions (RMDs) that would otherwise be required of owners of IRAs and of certain defined contribution plans.
Individual owners of such plans who were born before 1 July 1949 are normally required to initiate distributions starting for calendar year in which they reach 70 ½.
Under recent legislation — the Secure Act — individuals who were born after 30 June 1949 would normally be required to initiate distributions at age 72.
Distributions are taxed as ordinary income. If a taxpayer does not need all or part of his or her RMD for current income, it can be beneficial to let the funds remain invested until future years.
There is no provision in the CARES Act for a taxpayer to reverse distributions that may already have been taken in 2020.
Congress passed a similar suspension for 2009.
Daniel P. Doyle – Bayside, New York – Fellow, Governance & Accountability Institute – https://www.ga-institute.com/about-the-institute/fellows-of-the-institute/daniel-p-doyle/daniel-p-doyle-career-information.html