Gordon Advisors - IRS Provides RMD Relief for 2020
IRS Provides RMD Relief for 2020
August 9, 2020 by Mary Wade, CPA, M.S.T.
The $2.2 trillion CARES economic stimulus bill passed in March to provide relief from the COVID-19 pandemic in the United States included a number of provisions related to required minimum distributions (RMDs) from retirement plans. These changes were designed to allow seniors to retain plan assets when they might otherwise have to sell at market lows due to the economic impact of Coronavirus.
Participants in account-based retirement plans are required by law to take RMDs after the plan participant or IRA owner reaches a certain age. The goal is for individuals to use their tax-advantaged retirement assets during their lifetime rather than passing on to their heirs. Distribution amounts for each year are based on a formula that includes the individual’s age and account balance at the end of the prior year.
“Since RMD amounts are calculated based on the value of the account at the end of the previous year, the market fluctuations due to COVID-19 could have had unfavorable consequences for some taxpayers,” says Mary Wade, Senior Manager at Gordon Advisors. “The IRS recognized this and included it in the CARES bill to provide some flexibility for those who can afford not to take distributions.”
Since RMDs out of non-Roth IRA accounts are fully taxable at ordinary rates, retirees who can afford it usually elect to postpone them as long as possible. We’ve addressed common questions relating to the RMD relief provisions, but please contact Gordon Advisors for any additional information related to your specific tax situation. We are here to help.
Learn more here: https://www.gordoncpa.com/2020/08/09/irs-provides-rmd-relief-for-2020/
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