I had many questions last week regarding the changes to this years Required Minimum Distribution (RMDs), in light of the CARES Act. IF you still have to take an RMD this year and have not yet taken it, this information may be beneficial for you or to pass along to your parents, friends or other relatives.
Here are some of the most common questions I am getting and my thoughts for you,
- I heard on the news that I do not need to take a RMD this year, is that Correct? – Yes, the CARES Act has eliminated RMDs for owners and beneficiaries for 2020. IF you turned 70 ½ in 2019 and deferred your 2019 distribution, you are not required to take a 2019 or 2020 distribution.
- My account value is down, should I not take a distribution this year? - We do not know what the future will hold. My HOPE is that with time the markets will return and we will all see our investment accounts restored and our economy strong. I would encourage you to contact me, so we can discuss how your account has been affected by the recent market volatility and if taking or not taking an RMD this year is in your best interest.
- Should I stop my monthly distributions because of the losses in my account I have experienced? - I would first ask, is the distribution you are taking money that you truly need for your income? OR are you taking the distribution ONLY to satisfy your RMD and really do not need the additional income? If you are unsure, please contact me so that we can discuss your situation in greater detail.
- I take monthly payments from my IRA account, does this mean these are not required? - Keep in mind there is a difference between an RMD and a systematic payment. A systematic payment that is being taken out of your retirement account (IRAs or 401K) might go towards meeting your RMD but you may still want to keep these payments especially if they are used to pay living expenses.
- I already took my RMD this year, can I return it to my account? – RMDs already taken can be returned to your account using the 60 day rollover strategy. The timing and dates of returning the payment are a bit unclear. I would suggest we talk to determine the date your distribution was taken and also seek some advice from your tax advisor or accountant.
As always each and every person’s situation is different. It is not always appropriate to listen to what your friends or neighbors are doing. If you have questions I encourage you to call me or schedule a meeting.