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ArticleShould You Put Your Required Minimum Retirement Distributions on Pause?



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By Ekta Patel, CFP®, Director and Advisor

CARES Act Lets Retirees Skip Withdrawals in 2020 to Cushion Blow of Market Downturn

Have you begun taking required minimum distributions (RMDs) from your retirement plans? The federal Coronavirus Aid, Relief, and Economic Security Act (CARES Act) enacted in March suspends these mandatory withdrawals during calendar year 2020, partly to help retirement accounts recover from severe market downturns that occurred early in the pandemic.

The revision in rules for those over the age of 70½ (born before July 1, 1949) or 72 (born after July 1, 1949) should be evaluated as one aspect of an optimal retirement account withdrawal strategy — especially if you’re just starting to take RMDs. And if you already took an RMD this year, this legislation gives you a new option to return the funds to a retirement account.

Suspension of RMDs

If you’re retired, this part of the CARES Act relief package is probably most pertinent for you. It’s applicable to RMDs from Traditional IRAs, SEP IRAs and SIMPLE IRAs, 401(k), 403(b) and governmental 457(b) plans. If you already have taken a mandatory RMD this year but don’t need to spend it right now, you may still be able to reverse it in several ways:

  1. Via a 60-day rollover (only one such distribution can be made during a 12-month period). If you do so, note:
    • Taxes that were withheld;
    • Whether you’ve taken multiple distributions in the year; and
    • The need to inform your tax professional about the Form 1099-R that will be generated
  1. Through a coronavirus-related distribution (see requirements in this post)

Even greater flexibility was announced June 23 by the IRS for those who already took one or more RMDs in 2020. The 60-day rollover window to put funds back into a retirement account has been extended to include any distributions taken as early as Jan. 1, 2020, if completed by Aug. 31. In addition, the IRS guidance removes the limit of one rollover per year for RMDs, so now individuals who have taken multiple monthly distributions this year can roll over all those distributions, too. Finally, the IRS also significantly relaxed the rollover rules by allowing non-spousal beneficiaries to return an RMD taken (typically rollovers are not possible for non-spousal beneficiaries).

Note: It’s worth thinking about converting any returned RMDs to put them into your Roth IRA because the reversal will be taxable regardless.

Strategy for Suspended RMDs

The CARES Act measures should be seen as one more part of an advantageous retirement account withdrawal roadmap, especially if you’re close to the end of your career and expect 2020 to be a lower-tax year, or if you are already taking RMDs. If you’re able to hold off on or reverse all or part of a distribution already made this year, that could allow time for the money to grow and help avoid selling investments at lower levels to fund your RMD. The window afforded by the new act also can help reduce your 2020 taxable income and provide benefits from tax-planning strategies like making Roth conversions.

The CARES Act brought numerous options for rapid financial relief to many affected by COVID-19, and it also gives some new alternatives for management of your retirement plan distributions. Looking to discuss the CARES Act, your retirement or another financial topic? Please reach out to your Altfest wealth management team or schedule a complimentary consultation with Altfest at this link.


Speak with a Financial Professional

The CARES Act delivered many changes, including swift easing of longstanding rules for retirement plan withdrawals and distributions. Looking to discuss the CARES Act, or another financial topic? Schedule a complimentary consultation with Altfest.



Opinions expressed herein are solely those of Altfest Personal Wealth Management, unless otherwise specifically cited.  Material presented is believed to be from reliable sources, but not representations are made by our firm as to other parties’ informational accuracy or completeness.  All information or ideas provided should be discussed in detail with an advisor, accountant or legal counsel prior to implementation.



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