On March 27, 2020, The Coronavirus Aid, Relief, and Economic Security (CARES) Act was passed by Congress and signed into law by President Trump. One of the provisions of this legislation that will directly impact many of our clients financial plan involves 2020 Required Minimum Distributions from retirement plans.  We have been getting inquiries so wanted to address a common question we see are receiving.

The CARES Act waives the requirement that a participant take their Required Minimum Distribution (RMD) in calendar year 2020. This applies to RMDs from defined contribution plans such as 401ks, employee stock ownership plans, profit-sharing, money purchase, 403b and governmental 457b plans, as well as individual retirement accounts (IRAs), and Inherited IRAs.  It is important to note that the waiver does not apply to RMDs from defined benefit pension plans.

Already taken your RMD in 2020?  While there is no provision in the bill that allows replacing the distribution already taken this year, we have read that the IRS may allow the funds to be replaced within 60 days, effectively reversing the transaction.  The IRS has not provided guidance on whether this will be allowed but we will monitor update as things develop.