CARES Act of 2020 highlights

DID YOU KNOW...

The recently passed CARES Act offers several potential benefits as it relates to Retirement Plans.  

#1, RMD Relief.

 If you were over 70 & ½ 7/31/2019, and 72 in 2020 (see new SECURE Act) you can “pause” your “RMD”, Required Minimum Distribution, in 2020. Additionally, if you already took them over the past 60 days you have the option of putting it back in thus relieving you of the taxable event for 2020.

Additionally, beneficiaries of Inherited IRA’s have the option to suspend their RMD as well.

This is optional and depends on your situation. I recommend consulting your accountant, financial advisor or feel free to reach out privately. 

 

#2, 401(K) loan and withdrawal rule change.

Traditional hardship distributions under age 59 & ½ are usually subject to an additional 10% tax penalty on early withdrawals. The CARES Act waives the additional 10% in 2020 for someone adversely affected by COVID-19.9. In addition, the limit has been doubled to $100,000 max that can be withdrawn, aggregated across all qualified plans, 403(b) plans, governmental 457(b) plans or IRAs of the individual. The tax on the income due to the distribution can be spread over a three-year period and the amount distributed can be repaid into the plan (or IRA) over the next three years. Any repayments would not be subject to the plan contribution limitations.

This is optional and depends on your situation. I recommend consulting your accountant, financial advisor or feel free to reach out privately.