Waiving 2020 RMD & Important Retirement Account Changes

Waiving 2020 RMD & Important Retirement Account Changes

financial planning

On March 27, 2020, the ‘Coronavirus Aid, Relief and Economic Security (CARES) Act’ was signed into law which waives the 2020 required minimum distribution (RMD) from individual retirement plans (Traditional IRAs, SEP IRAs, SIMPLE IRAs, and inherited IRAs and Roth IRAs), employer retirement plans (401(k), 403(b) and 457 plans).

This means that, if you were born before June 30, 1949, you are not required to withdraw your RMD from your retirement account in 2020. You can still take a distribution but it is not required. All RMD requirements will go back into effect for 2021.

If you wish to waive your RMD for 2020 or if you have questions regarding your RMD please contact our office at (800) 416-1655 or clientcare@hammondiles.com.

Age Raised for Required Minimum Distributions

The tax code requires all individuals with an IRA or employer retirement account to start taking an RMD at a certain age. The SECURE Act increased the age to start RMDs from 70½ to 72. This will allow individuals born after June 30, 1949 to wait until the year they turn 72 before taking their first RMD.

The SECURE Act Retirement Account Changes

As part of a 2018 year-end spending bill Congress passed the ‘Setting Every Community Up for Retirement (SECURE) Act.’ This Act made significant changes that may impact your retirement planning.  See details.

IRA Charitable Rollovers Still Available at Age 70½

Despite the age change for RMDs, the SECURE Act did not change the rules related to Qualified Charitable Distributions (QCDs). An IRA owner over the age of 70½ can make a QCD of up to $100,000 per year directly from their IRA to a charity without any tax consequences. The amount distributed to a 501(c)3 charity is not deductible, but is also not reported as income. This strategy is very effective by using before tax dollars to make charitable donations while potentially reducing your federal and state income taxes. Please note: a QCD can only be made from an IRA and does not apply to employer retirement accounts (401(k), 403(b), or 457 plan).

We are here to help you and your family. You can contact our office anytime you have questions, need more information or to schedule a time to discuss any of these retirement account changes and how they might apply to you. Don’t forget to check www.hammondiles.com for the latest online workshops to help you and your family feel more at ease amid today’s uncertainty.

About Greg Hammond, CFP®, CPA

Greg Hammond is the chief executive officer of Hammond Iles Wealth Advisors, and co-founder of Planned Giving Strategies®. Greg leads a team of professional financial advisors providing customized wealth management and investment solutions for high-net-worth individuals, families, companies, and charitable organizations across the U.S.