My father-in-law sent me an interesting article this week that I thought I should share with you all. An interesting add-on to the recently passed $2 trillion dollar stimulus plan (CARES Act) includes a temporary waiver of required minimum distributions (RMDs) on some IRA's for calendar year 2020. Also included was a provision that waived the 10% penalty for early withdrawals (prior to 59 1/2 years old) on IRAs and defined contribution plans for participants experiencing financial hardships.
Key points include:
- Required minimum distributions are suspended for 2020.
- Allows individuals to avoid a tax bill on IRA values that are typically no longer. Values would be normally based off account values as of Dec. 31, 2019.
- Applies to IRA and Roth IRA beneficiaries who have 2020 RMDs.
- Retirement plan loan amount is doubled. Loan limits from retirement plans have been increased from $50,000 to $100,000.
- You have 3 years to pay the taxes on the amount withdrawn and you have 3 years to repay the withdrawal, and the repayments will not be counted toward the annual contribution limits.
Please read here for more details and feel free to reach out to discuss.
Photo Darren Halstead, Unsplash
This is meant for educational purposes only. It should not be considered investment advice, nor does it constitute a recommendation to take a particular course of action. LPL Financial does not offer tax advice. Please consult with your financial professionals regarding your personal situation prior to making any financial related decisions. (03/20)