By Matthew Gaude & Shawn McGuire
Back in March, in response to the economic challenges of the COVID-19 pandemic, the government provided a $2 trillion coronavirus economic relief package. Their goal was to help Americans survive this unexpected storm by giving financial support to individuals, small businesses, big corporations, education, and many more sectors of our society.
One particular benefit pertained to retirees: waiving required minimum distributions (RMDs). Let’s take a look at the original details and an important recent update to note.
Required Minimum Distributions Waived For 2020
If you are currently retired and taking required minimum distributions (RMDs) from your retirement accounts, under the CARES Act, you are not required to take RMDs in 2020. (1) This is particularly valuable since RMDs are calculated based on your account balance in the prior calendar year, and most balances are now much lower than they were at the close of 2019.
Of course, if you need to take a distribution to pay your bills and maintain your lifestyle, you may, but there is no mandatory withdrawal amount. When this bill was first enacted in March, the rule was that you could simply return any 2020 RMDs to your retirement account, but it had to be done before the end of the 60-day rollover window. (2) In other words, if you took an RMD distribution prior to February 1st, you were out of luck.
Update #1: April 2020
In April, the IRS released Notice 2020-23, which extended the 60-day rollover rule. (3) Under this amendment, if you took a distribution on or after February 1st, you could roll it back into your account by July 15th or 60 days after you received your distribution, (4) whichever comes later. Unfortunately, those who received their RMD in January were still stuck.
Update #2: June 2020
Thankfully, the IRS fixed this and now those early birds are no longer excluded from this benefit. According to Notice 2020-51, anyone who took an unwanted distribution in 2020 can roll that amount over to their retirement account to the later date of August 31, 2020, or 60 days after you received your distribution. As a bonus, under Notice 2020-51, beneficiaries now have the freedom to roll over their 2020 inherited RMDs as well.
In addition, the most recent update also excludes RMD rollovers from the once-per-year rollover rule.
Do You Need To Roll Over Your RMD?
Any time you move money between accounts, you want to make sure it’s done right. If you’ve been hoping the IRS would allow you to put your hard-earned money back into your retirement account, Live Oak Wealth Management would love to help you manage the process carefully. Call our office at 770-552-5968 or email [email protected]. Or, if you prefer, you can simply click here to schedule an appointment online. We’d love to answer your questions and help you make the most of your money during these troubling times.
Matthew Gaude is an *investment advisor representative and the co-founder of Live Oak Wealth Management, a financial services firm in Roswell, Georgia. He serves the planning and investment needs of corporate employees, those approaching or in retirement, and 401(k) plan sponsors. Working first as a commodity broker and then as a Business Development Manager for a national broker-dealer in previous jobs, he has the insight and experience to help clients understand the complexities of the market and implement strategies to minimize risk. To learn more about Matthew, connect with him on LinkedIn or visit www.liveoakwm.com.
Shawn McGuire is a financial advisor and the co-founder of Live Oak Wealth Management, a financial services firm in Roswell, Georgia. He serves the planning and investment needs of corporate employees, those approaching or in retirement, and 401(k) plan sponsors. He has worked in financial services since 2002 in positions ranging from financial advisor to stock broker and portfolio manager. As a CERTIFIED FINANCIAL PLANNER™ professional, he is trained to help clients with virtually all their financial needs. To learn more about Shawn, connect with him on LinkedIn or visit www.liveoakwm.com.
Securities offered through American Portfolios Financial Services, Inc., member FINRA/SIPC. Investment advisory services offered through *American Portfolio Advisors, Inc., a SEC Registered Investment Advisor. Live Oak Wealth Management, LLC is independently owned and not affiliated with APFS or APA.
Any opinions expressed in this forum are not the opinion or view of American Portfolios Financial Services, Inc. (APFS) or American Portfolios Advisors, Inc. (APA) and have not been reviewed by the firm for completeness or accuracy. These opinions are subject to change at any time without notice. Any comments or postings are provided for informational purposes only and do not constitute an offer or a recommendation to buy or sell securities or other financial instruments. Readers should conduct their own review and exercise judgment prior to investing. Investments are not guaranteed, involve risk, and may result in a loss of principal. Past performance does not guarantee future results. Investments are not suitable for all types of investors. Seek tax advice from a tax professional.