TUCSON, Ariz. (KOLD News 13) - The CARES Act brings financial relief to retirees by waiving all required minimum distributions due in 2020.
You generally have to start taking out withdrawals from your retirement plan account when you reach a certain age. That amount is called a required minimum distribution or RMD.
Normally, there is a consequence if you do not take any distributions, or if the distributions are not large enough, but the CARES Act changes this for 2020.
By not taking an RMD, you can reduce your 2020 tax bill.
Who qualifies? Anyone with an RMD due in 2020 from a company plan, like your 401(k), 403(b) plan, IRA, or other defined contribution plan, may be eligible.
This allows retirees to leave their investment portfolios alone to recover over the next year and not get taxed on mandatory withdrawals.
If you already took an RMD for 2020, you may be out of luck.
There is no provision that allows you to return your RMD to the retirement account unless you did this recently.
If you took an RMD from an IRA or 401(k) within the last 60 days, you may eligible for a 60-day rollover to an IRA and not have to treat it as a taxable distribution in 2020.
Even though the CARES Act waives RMDs this year, you can still make a withdrawal if you need to.
Check with a professional tax or financial adviser to find out which option is best for you.