2020 has been a bad year for most Americans, especially older ones, but there’s good news for those with qualified retirement accounts. For the current year, retirement account rules have been put on hold.
The CARES Act (Coronavirus Aid, Relief and Economic Security Act) provides emergency assistance for individuals, families and businesses affected by the coronavirus pandemic. Provisions include suspensions of some rules in 2020 for retirement accounts. Both retirement savers and retirees will benefit.
Retired persons have the flexibility this year to avoid taking required minimum distributions (RMDs). That means those who saved can hang onto more of their nest eggs, letting their money grow another year without taking out the annual withdrawal. Besides keeping more of their money in savings, retirees who have reached the age for mandatory distributions won’t have to worry about selling investments when markets may be low.
The act also offers benefits for people now saving in retirement accounts. They can tap into some retirement savings to cover income gaps caused by the virus. Highlights of the CARES Act include:
Waiver of required minimum distributions (RMDs). RMDs have been waived for retirees with qualified retirement accounts. The same waiver applies to any beneficiaries who have inherited such accounts. Account holders who may have already taken a distribution for this year may be able to roll their withdrawals back into their accounts under certain circumstances. Call (616) 531-5220 for details.
Penalty-free early retirement account distributions. The 10 percent early withdrawal penalty is waived in 2020 for up to $100,000 . . . if people saving for retirement in qualified accounts have a Coronavirus diagnoses, a spouse or dependents diagnosed with the virus or financial consequences from being quarantined, furloughed, laid off, having work hours reduced, being unable to work due to lack of child care during shut-down, or owners or operators who had to close or reduce business hours due to Covid-19.
Extended tax payment deadlines. Income from distributions will be taxed equally over the next three years or may be put back into a retirement account within three years, without affecting caps on that year’s retirement contributions.
For details on other retirement account provisions of the CARES Act, including expansion of retirement plan loans and an extended deadline for IRA contributions, contact Ronald Van Surksum at Advanced Asset Management LLC at (616) 531-5220 or (616) 450-8439 or email: firstname.lastname@example.org
Manage Your Money . . . financial facts for a brighter future provided by Advancd Asset Management LLC Follow our blog: aamllc.com Ronald Van Surksum, CFP 4555 Wilson Ave SW – Suite 2 Grandville, MI 49418
email@example.com Phone: (616) 531-5220 Cell: (616) 450-8439
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