Financial Insights

Did You Know: Required Minimum Distributions for 2020

Facts:  Taxpayers who are age 72 or older (or those who turned 70 ½ before December 31, 2019) are required to withdrawal minimum distributions (RMDs) from their retirement plan accounts on an annual basis.

The CARES Act passed on March 27, 2020 enabled any taxpayer with an RMD due in 2020 from a defined-contribution retirement plan, including a 401(k) or 403(b) plan, or an IRA, to skip those RMDs this year.  This includes anyone who turned age 70 1/2 in 2019 and would have had to take the first RMD by April 1, 2020. This waiver does not apply to defined-benefit plans.

Action Plan:  You have a choice. There is no prohibition on taking distributions from your retirement plan accounts (although income taxes apply to most distributions and an additional 10% penalty may apply to distributions taken before the age of 59 ½ ).  But you are not required to take a distribution in 2020, which may reduce your taxable income this year and allow the assets in your retirement plan accounts more time to grow.

Required Minimum Distributions will be required again in 2021.

If you have any questions on Required Minimum Distributions from your IRAs, Inherited IRAs or other qualified retirement plans, please contact your ACM Wealth Advisor.

The foregoing content reflects the opinions of Advisors Capital Management, LLC and is subject to change at any time without notice. Content provided herein is for informational purposes only and should not be used or construed as investment advice or a recommendation regarding the purchase or sale of any security. There is no guarantee that the statements, opinions or forecasts provided herein will prove to be correct. Past performance may not be indicative of future results. Indices are not available for direct investment. Any investor who attempts to mimic the performance of an index would incur fees and expenses which would reduce returns. Securities investing involves risk, including the potential for loss of principal. There is no assurance that any investment plan or strategy will be successful.

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