Written by Jennifer Cochran

The Cares Act includes several measures designed to stimulate the economy. One provision allows retirees to forgo taking required minimum distributions (RMD) from an IRA, 401(k), Roth 401(k), and inherited accounts. This doesn’t apply to defined benefit plans.

The provision allows retirees to keep money in their accounts, allowing them to recover the losses obtained during the COVID-19 pandemic.  This provision is for anyone required to take RMD’s regardless of your age. The retiree can reduce the amount of the RMD or not take any RMD in 2020.

If you have already taken an RMD in 2020 you can pay it back by August 31, 2020. The 60-day rule is waived for 2020. So, any RMD taken in 2020 can be paid back regardless of when you took the distribution in 2020.  If you had withholding taken out, this amount will be filed on your 2020 tax return and applied to the taxes on other income or refunded, depending on your tax situation.

Please consult your Whitlock Company CPA for questions and tax planning.