The CARES Act: Part 2

You may remember Part 1 of our CARES Act Blog which we posted on April 1.  At that times, we labelled the post as Part 1 because we were confident there would be a change to the Act.  Glad we were right about SOMETHING!

As a reminder,  CARES stands for Coronavirus Aid, Relief and Economic Security Act.  The bill itself is over 800 pages long and has economic provisions for individuals, small and large businesses, state and local governments, public health and education/other. 

Back in April, we talked about the following changes to required minimum distributions (RMDs) from IRAs for 2020:  

RMDs (Required Minimum Distributions) have been suspended for 2020: 

• This suspension includes inherited IRAs

• There will be no penalty assessed if the distribution is eliminated in 2020

• Obviously the majority of retirees need this money for living expenses and will need to take the 2020 distribution anyway

If you have already taken your 2020 RMD, but don’t need the cash for living expenses in 2020:

• You have 60 days to return the dollars to a retirement account without paying the taxes

• We are not yet sure how Ameritrade will want to handle this transaction so let us know if you are interested in pursuing

• You can also convert this distribution to a Roth IRA and pay the taxes as you had planned.  Again, call us if you are interested  in doing this. 

The newest change is that the 60-day limit for return of funds to an IRA has now been eliminated, which means that any distributions taken in 2020 can now be returned to your IRA, even if you actually took the distribution in January.  You will get the taxes refunded to you in April 2021.  Alternatively, you can put the dollars in your Roth IRA. 

As always, let us know if you have questions or want to pursue.  As expected,  there is paperwork.