2020 IRA Required Minimum Distributions Waived – Did You Know?
The CARES Act that was signed into law on March 27, 2020 includes an important provision for taxpayers with various retirement accounts, including 401(k), 403(b), 457(b), traditional Individual Retirement Accounts (IRAs), and designated Roth accounts. For many taxpayers, the law waives their obligation to withdraw a certain amount from such accounts (called a required minimum distribution, or RMD) during tax year 2020.
Under standard IRS rules for the above retirement account types, you would need to accept a 2020 RMD if you turn 72 years of age in 2020, turned 70 1/2 in 2019 or before, or are any age and inherited the account as a beneficiary. RMDs are usually taxed as ordinary income. However, the CARES act allows you to skip your 2020 RMD without penalty. Note that Roth IRAs are not affected by this waiver, since they do not have RMDs under normal circumstances.
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Disclaimer: For informational purposes only. Does not constitute legal, financial, or other advice. Consult with a professional before taking any action.