The federal government has met the current COVID pandemic with a multitude of financial assistance programs and tax law changes in order to alleviate the financial burden many individuals and businesses are currently feeling as a result of the various public orders to combat the disease. A lot of the tax law changes are time-sensitive and we thought we would share a very important one with you that expires at the end of this month, August 31, 2020.
The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) allow any taxpayer required to take a Required Minimum Distribution (RMD) in 2020 from a qualified retirement plan and/or an IRA to skip the RMD for 2020. This would include any individual who turned 70 ½ in 2019 from taking an RMD by April 2020.
Any individual who has already taken an RMD in 2020 prior to, or subsequent to, the passage of the CARES Act in March 2020, and would like to avoid being taxed on the income from the RMD may return the distribution to the qualified retirement plan or IRA, or roll the distribution over to another IRA. The deadline for making this rollover so that the distribution is not included in gross income for tax purposes in 2020 is at the end of this month, August 31, 2020.
There are many reasons it would benefit an individual to skip their RMD for 2020. However, there might just as well be tax advantageous reasons to not skip the RMD for 2020. If you have taken, or are considering taking, an RMD for 2020, do not hesitate to give us a call to help you determine whether or not it is better to take an RMD in 2020.