RMD Requirement Modified for 2020

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    Ven Suresh

    Waiver of RMD Requirements in 2020 was included as part of the Coronavirus Aid, Relief and Economic Security Act.

    This new law, which was enacted on March 27, 2020, provides relief to investors by waiving the required minimum distribution (RMD) obligation from retirement accounts in 2020. This waiver applies to 2020 calendar year RMDs and, for investors who attained age 70½ in 2019 and did not take their first RMD by December 31, 2019, the waiver applies to the 2019 RMD that would normally have been due by April 1, 2020. The legislation enables investors subject to RMDs in 2020 to avoid liquidating investments or transferring assets from retirement accounts that may have decreased in value due to market volatility. Retirement accounts affected by this waiver include Traditional and Rollover IRAs, SEP-IRAs, SIMPLE IRAs, and workplace retirement plans.

    The waiver also applies to RMDs required by beneficiaries of inherited IRAs (including Roth IRAs) and inherited workplace retirement plan accounts.

    For beneficiaries who inherited an IRA or workplace retirement account that is subject to the 5-year distribution rule, the year 2020 is disregarded. Those beneficiaries will now have a total of six years to complete their distributions.

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