The CARES Act (The Coronavirus Aid, Relief, and Economic Security Act) became law on March 27th, 2020. It contains significant legislation for Required Minimum Distributions (RMD) for those over age 70 ½ who have already started RMD. Under previous IRS distribution laws, a minimum distribution from a pre-tax retirement savings account, such as a 401(k), IRA, or other tax-sheltered accounts, would have to happen in 2020 to avoid the penalty for not taking a distribution. Under the CARES Act, no RMD is required for individuals or beneficiaries of inherited retirement accounts in 2020 due to COVID-19. How will this help investors?
Under the CARES Act, an additional economic relief provision is built-in for COVID-19 hardship distributions. Investors can access up to $100,000 from their employer retirement savings without penalty if impacted in any of the following ways:
As with the act’s RMD provisions, taxes are due on any hardship distribution from a tax-sheltered retirement plan, but no early distribution penalty will apply. Despite what is happening to the stock market, our economy, and health, right now may be the best time to consider an RMD distribution or a hardship distribution. If you have any questions about the CARES Act and the above information, feel free to reach out anytime.
At Lakeview Financial Solutions we truly enjoy helping people make smart financial decisions. In addition, we look forward to learning more about you, your priorities, and your goals. Contact us today to discuss your retirement strategy.