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More Investors Qualify For Relief Under CARES Act Expansion

Posted by Sweeney Conrad, PS on Jul 1, 2020 11:05:04 PM

InvestorsThe IRS recently announced expanded required minimum distribution (RMD) relief under the CARES (Coronavirus Aid, Relief, and Economic Security) Act.  Here is what has changed for investors:

  • A new deadline of rolling back RMDs of August 31, 2020: Previously, investors who took their 2020 RMDs before February 1st were unable to roll back those distributions, and IRA beneficiaries weren’t included in the rollback options. As of June 23, all investors who already took RMDs in 2020 are able to roll back distributions into the same inherited IRA by August 31. The new date replaces the previous requirement of rolling back within 60 days of distribution. In addition if an investor takes an RMD in 2020 and rolls it over, they are not subject to the 1-rollover-per-365-days rule. Get more info about rollover rules here.
  • Increased flexibility for investors taking an RMD in 2020: The expanded rules increase the ability to take penalty-free distributions in 2020 from an IRA or employer-sponsored plan, for investors affected by the coronavirus crisis. Under the CARES Act, investors may be able to distribute up to $100,000 from an IRA or employer-sponsored plan in 2020, without the normal 10% early withdrawal penalty. In addition, investors have the option to return some or all funds to an IRA or another retirement plan within 3 year, and any income tax due on those contributions can be spread over 3 years.
  • Expanded eligibility criteria for taking a distribution. You may be eligible to take a distribution if:
      • You, your spouse, or your dependent is diagnosed with COVID-19.
      • You, your spouse, or member of your household experience adverse consequences due to COVID-19 as a result of furlough, layoff, reduction in work hours, inability to work due to lack of child care, closing/reduced hours of the business you own or operate, having pay or self-employment income reduced, or having a job offer rescinded or start date for a job delayed.

Topics: Tax, COVID-19

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