The following is one in a series of updates from branch manager, Doris Elkins, on developments in the investment world that directly impact our clients.
Did you know that as a result of the recently passed Coronavirus Aid, Relief, and Economic Security (CARES) Act, Required Minimum Distributions (RMDs) for 2020 have been waived? This relief is perceived as a benefit for most advisors and applies to defined contribution plans, including 401(k)s, 403(b)s, 457(b) plans, and IRAs, as well as to beneficiaries taking distributions (i.e. Beneficiary IRAs).
For any investor who has already taken their RMD for the year, there still exists a 60-day period from the date of the original distribution to return those funds if you would like them to continue growing tax-deferred and/or wish to avoid paying the taxes on them.
For clients with RMDs set to automatically distribute later in the year (most of our clients) as well as those who have taken a distribution within the past 60 days, now is an opportune time to act to take advantage of this opportunity. For most of our clients who are indifferent to timing, we’ve typically establish a November or December distribution date.
This legislation follows closely on the heels of another piece of legislation, the SECURE Act, that was quietly passed at the end of 2019 and raised the date for your first RMDs from age 70 1/2 to 72.
If you are currently an RMD recipient, both changes will allow you the ability to keep more of your funds in your retirement accounts this year. This is a great opportunity to keep investing and growing funds that would normally have to be withdrawn. The measure was added specifically as a result of this year’s unprecedented volatility and if you are eligible, means many retirement accounts will benefit from another year of potential investment growth to recover.
If you have any questions, please feel free to reach out to me at (830) 496.3625 for Kerrville and (830) 997.5250 for Fredericksburg. Thanks!