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Evaluating Your Required Minimum Distribution Options

…and now for the good news with an August 31st 2020 deadline.

If you are or will be age 72 or older in 2020, or reached age 70 1/2 prior to the passage of the SECURE Act, or have inherited an IRA, you are probably aware that the requirement to take distributions has been waived in 2020 and that you might even be able to return some that you have already taken this year.

In March of 2020 Congress passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act and it allowed Americans who had to take Required Minimum Distributions during 2020 to suspend them and for a limited group they could even refund them to their accounts.  It left some confusion, however, about returning distributions that had been taken in multiple increments or ones that were taken very early in the year outside of a specified date range, among other clarifications needed.

The good news is that on June 23, 2020 the IRS released Guidance on Waiver of 2020 Required Minimum Distributions (Notice 2020-51) and it clarifies that anyone who has taken an RMD in 2020 (yes, even from inherited IRA’s) can return them to the account until August 31, 2020.  It is important to note that deadline and contact us immediately if you want to explore this option.

If you have income in 2020 that you were not expecting or that was higher than anticipated, this could be a chance to reduce your income subject to taxes for 2020.  If you are in the middle of a Roth conversion strategy, we may weigh the benefit of simply converting those RMD’s to more Roth dollars versus returning them to tax-deferred status. Either way, we are very happy to have both options to explore for our clients along with clarity on how each will be treated by the IRS.

Marietta Hall, CFP®
Senior Financial Advisor



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