RMDs In The Year Of Coronavirus

We’ve written recently about ways to tap a retirement account for extra money during the coronavirus emergency.  But what about the flip side – holding in tax-deferred money that was scheduled to be withdrawn from an IRA or 401(k)?

It winds up that Congress temporarily suspended the rule on Required Minimum Distributions (RMD) in its coronavirus relief law.  In short, retired workers can just omit the withdrawals they would have to take from their retirement accounts this year. It’s a one-time offer, good just for tax year 2020.

Normally, when workers reach age 72 – it was 70½ until recently — they must start taking money out of many types of retirement accounts.  A Required Minimum Distribution (or RMD) is set using a federal formula. It is subject to income taxes at that point, after growing without taxation inside the account.  (One major exception is the popular Roth IRA, which does not require RMDs.)

To see how RMDs might affect retirement, workers might want to discuss the prospects with a finance professional. Call Eric Buechler, owner of EricJohn Ltd. and an enrolled agent recognized by the IRS, for guidance about your specific tax circumstances or finances.

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