An update regarding Required Minimum Distributions from your Defined Contributions summarized by Leo Hudetz, AMRPE Board member
IRS Changes Regarding Required Minimum Distributions (RMDs)
Because of recent legislation, there has been a number of changes to IRS rules regarding retirement accounts. Below are two of the changes that may affect our members. Please consult your financial or tax advisor if you have questions regarding these or other tax laws.
No Required Minimum Distributions (RMD) required in 2020
The Coronavirus Aid, Relief, and Economic Security Act, or CARES Act, waives required minimum distributions during 2020 for IRAs and retirement plans, including beneficiaries with inherited accounts. This waiver includes RMDs for individuals who turned age 70 ½ in 2019 and took their first RMD in 2020.
Some Retirees May Wait Until Age 72 to Start Taking RMDs
Under the old law, people with traditional IRAs, as well as 401(k) plans and other workplace retirement plans, were mandated to begin taking required minimum distributions (RMDs) after reaching age70 ½.
Under new legislation passed in 2019, those who were age 70½ or younger on Jan. 1, 2020, their first RMD is not due until April 1 of the year after they turn age 72. For example, for those who turn 72 on July 1, 2021, they must take their first RMD (for 2021) by April 1, 2022, and their second RMD (for 2022) by December 31, 2022.
Please review this information with your financial advisers to ensure you are making the best decisions for your retirement.