As you know, The CARES Act passed earlier this year has various financial implications. Additional guidance was recently released, and as your financial advisor, we wanted to highlight some key items for your reference.
Updates to Required Minimum Distributions (RMD):
- Extends the normal 60-day rollover period to permit repayments of 2020 RMD amounts previously made through August 31, 2020. This includes all RMDs made during 2020 (even those made in January that were previously disallowed). Amounts distributed in excess of the RMD are not included in this extension.
- Waives the one per year rollover limitation.
- Permits repayment by all non-spouse beneficiaries (“Inherited IRAs”) of 2020 RMD amounts previously made through August 31, 2020. Amounts distributed in excess of the RMD (including Coronavirus Related Distributions) are not included in this extension.
Updates to Coronavirus Related Distributions (CRD):
- Expansion of the definition of Qualified Individuals which are highlighted in “Table 1: Updated Individuals Eligible for Coronavirus Related Distributions”.
- A Qualified Individual is any individual (or spouse/dependent) diagnosed with COVID-19 or any individual (or member of their household) who experiences certain adverse financial consequences from COVID-19. The individual may self-certify that they meet these requirements.
- Non-spouse IRAs (“Inherited IRAs”) are now eligible for a CRD.
- The CRD may be made to a qualified individual from an eligible retirement plan or IRA between 1/1/20 and 12/31/20 in the aggregate amount up to $100,000.
- The 10% penalty on CRDs made to individuals younger than 59 ½ is waived.
- The tax on the amounts distributed as a CRD may be repaid within a 3 year period.
- CRDs may be recontributed within 3 years except for those CRDs made to a non-spouse IRA (“Inherited IRA”).
If you have any questions, our wealth advisors are available to help.