The CARES Act (The Coronavirus Aid, Relief, and Economic Security Act) contains the legislation for Required Minimum Distributions (RMD) for those over age 70 ½ and have already started RMD.for individuals or beneficiaries of inherited retirement accounts in 2020 due to COVID-19. How will this help investors?
An opportunity for clients who are typically required to take distributions from their IRA accounts is provided by The CARES Act. Individuals who are 72 and older don’t have to take their annual RMD based in 2020. They might consider a Roth Conversion. The usual amount of taxes will apply to the Roth Conversion amount. However, the dollar amount converted may occur during a down market. Investors can capture the potential market upside with no tax consequences on the Roth IRA’s growth on their initial conversion amount. We recommend that you consult with your financial advisor or tax professional for specific advice.
In addition, you may use the RMD from a tax-qualified plan to purchase an annuity. Under the same tax provisions of the CARES Act.
An additional economic relief provision is built-in for. Investors can access up to $100,000 from their employer retirement savings without penalty. This applies if impacted by COVID-19 in any of the following ways:
Taxes are due on any CARES Act retirement savings plan hardship distribution, but no early distribution penalty applies. If you are considering an RMD distribution or a COVID-19 hardship distribution, feel free to contact our office. We can provide clarification of The CARES Act.
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First Fruits Asset Management has been in the financial services profession since 2007. We work together to create a personalized financial plan. We then review and revise the plan as situations and/or goals change over time. Contact us today to learn more about how we can build a partnership with you today.