Be sure to use the laws to your advantage when considering what to do with your retirement accounts.
Change is abundant in 2020, and some important changes have been made concerning retirement and Required Minimum Distributions (RMDs). If you turned 70 ½ during 2019, listen up!
The great news is that there are no RMDs due in 2020 as declared in the CARES Act, passed earlier this year. Anyone who turned 70 ½ in 2019 and needed to take their first RMD by April 1, 2020 is included in this group. Here is the language directly from the IRS website:
“The CARES Act enabled any taxpayer with an RMD due in 2020 from a defined-contribution retirement plan, including a 401(k) or 403(b) plan, or an IRA, to skip those RMDs this year. This includes anyone who turned age 70 1/2 in 2019 and would have had to take the first RMD by April 1, 2020. This waiver does not apply to defined-benefit plans.”
In addition to the CARES Act changes, RMD age was changed to 72 by the SECURE Act, passed in 2019. Anyone who turned 70 ½ in 2020 will not have to take RMDs until the age of 72. This also means that anyone who is over 70 ½ may also continue to make traditional IRA contributions provided they have earned income.