SENIORS & RETIREES … ANOTHER FINANCIAL BREAK

SENIORS & RETIREES … ANOTHER FINANCIAL BREAK

No Need to Deplete Your Retirement Fund in 2020
And If You Have … At Your Option, Return Distributions to Your Account

SENIORS & RETIREES ANOTHER FINANCIAL BREAK

Earlier this year, we reported that President Trump signed the SECURE Act into law raising the Required Minimum Distribution (RMD) age to 72 from 70½ . That proved to be a boon for taxpayers who can afford to delay IRA withdrawals. Delaying receipt of the RMD until age 72 significantly reduced taxable income for many taxpayers. Be sure to click here for the details.

More Financial Relief for Seniors & Retirees

Now there is further financial relief triggered by The Coronavirus Aid, Relief, and Economic Security Act (CARES Act). The Act provides for RMDs to be waived during 2020 for IRAs and retirement plans. That expansion of benefits includes beneficiaries with inherited accounts.

Participants in virtually all defined contribution retirement plans qualify, i.e.:

  • traditional IRAs
  • SEP IRAs
  • SIMPLE IRAs
  • 401(k) plans
  • 403(b) plans
  • 457(b) plans
  • profit sharing plans

Note: The RMD suspension does not apply to qualified defined benefit plans.

Already Took Your RMD for 2020 … Good News!

At your option, you may return the distribution to your qualifying plan. Additionally, the suspension of the RMD rule for this year means your distribution is likely eligible for rollover to another IRA/qualified retirement plan as well as return to the original plan. The key is to repay the distribution to the distributing plan no later than Aug. 31, 2020, to avoid paying taxes on that distribution.

How Else May Seniors Benefit?

Why does skipping your RMD in 2020 matter? Like most people, you funded your IRAs and 401(k)s with tax-deferred dollars. Particularly if you are among the many Americans struggling in 2020 because of the pandemic, having more flexibility on distributions can be a financial bonus.

Additionally, both the equity and fixed income markets have been extremely volatile. You may win by giving your retirement portfolios another year to recover.

If any of the foregoing seems unclear as to how it applies to your specific circumstances, please keep in mind that Pearson & Co. will help.
Give us a call or drop an email. We’ll respond immediately.

 

 

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