Did you know that the federal CARES Act that became law earlier this year as part of the federal government’s COVID-19 relief efforts included a number of short-term changes designed to enhance the durability of retirement plan savings as well as emergency provisions to ease COVID-19 related hardships. Specifically, the CARES Act suspended all required minimum distributions (RMDs) for 2020 (you can still take them if you want to or need to but are not required to take your RMD in 2020). As RMDs are based on retirement account values as of the end of the prior year, this relief provision may be helpful to those with retirement plans who have other sufficient sources of income and do not need to take RMDs and who may want to give their retirement plan funds time to recover from the current market volatility. This suspension of RMDs for 2020 may also create opportunities for those considering converting their traditional IRA to a Roth IRA. If you already took out an RMD for 2020, you may be able to return the RMD to your plan or other retirement plan, but under current IRS guidance you must act by August 31, 2020. We will cover additional CARES Act provisions impacting retirement plans in future posts. To learn more on how the CARES ACT may impact your estate and retirement plan planning, please contact us today.
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