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.
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