On March 27, the President signed into law the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), the third COVID-19 relief bill. The more than $2 trillion stimulus package seeks to address financial pressures facing individuals, businesses, state and local governments, and the healthcare system due to the pandemic.
The law also carries notable provisions that impact IRA accounts, including the following:
1. Required Minimum Distributions (RMDs) for 2020 have been waived for all IRAs and retirement plan accounts, including RMDs from inherited IRAs that were established prior to 2020. If you already took your 2020 RMD, you may have up to 60 days to return a single distribution to an IRA or deposit it in another qualified retirement account without owing taxes on it. You also could convert the amount into a Roth IRA.
2. For those who qualify, the CARES Act also allows for a coronavirus-related distribution in 2020 from IRAs of up to $100,000, without being subject to the 10% early withdrawal penalty if the IRA owner is under 59½. The income tax on the coronavirus-related distribution may be spread evenly over 3 years. Or, the distribution may be repaid to an eligible retirement plan within a 3-year period.
This blog post should not be construed as tax advice. Each of these provisions is subject to limitations as well as further guidance from the IRS. Please consult your tax advisor for more information related to your personal tax situation.
The Edgemoor Team
