Five Common Questions for Qualified Plans and IRAs under CARES Act

1. Do I have to take my required minimum distributions (RMD) in 2020?

No. Required minimum distribution rules do not apply for 2020 for IRAs, Roth IRAs, qualified defined contribution plans, 403(b) plans and government-employer type 457 plans.

2. Does that mean my RMD in 2021 will be doubled? Is 2020 just postponed?

No. Your 2021 RMD will be calculated the exact same way as if you had taken your 2020 RMD.

Added bonus: If you turned 70 1/2 in 2019 and did not yet take your 2019 RMD, you do not have to take your 2019 or your 2020 RMD.

3. What if I already took my RMD for 2020?

If you are within the 60 day rollover period, you can likely roll over your distribution into your IRA. If your RMD was taken in February or later, you have until July 15, 2020 to roll over your distribution (the April 1 tax deadline was extended to July 15).

However, if the distribution (i) came from an IRA; (ii) you are trying to roll it into an IRA; and (iii) you have previously done an IRA to IRA rollover 12 months, this option will not be available to you. You could roll it into a qualified plan or Roth IRA (taxable conversion).

4. What if I am a beneficiary of an inherited IRA, can I roll over my 2020 distributions I have received?

No, unless you are the surviving spouse rolling into your own retirement account.

5. What if I distributed property (stocks) and then sold it?

If the distribution came from a qualified plan (examples: profit sharing plan, 401K plan, defined benefit plan), you can rollover the proceeds of the distributed property. If the distribution was from an IRA, you cannot do so (no substitution of proceeds).

Additional Considerations for 2020: Roth conversions and delaying qualified charitable distributions until 2021 to maximize offsetting your RMD.

*Please note that the questions posed and answers given are the most general of responses and not necessarily specific to all circumstances. Each individual's situation is unique. It is recommended that you consult with a lawyer or accountant to discuss how the CARES Act applies to your personal situation.

Stay up to date by monitoring the latest COVID-19 resources on our CORONAVIRUS RESOURCE CENTER.

Posted in: CARES Act/PPP
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