Coronavirus Relief for Retirement Accounts

By Sarah Brenner, JD
IRA Analyst

As the coronavirus pandemic has spread, many Americans have been hit hard. Their retirement accounts have also taken a serious blow as markets have plummeted. In these tough times, there is a bit of good news as the government has come through with some relief for retirement savers.

IRA Deadline Extended until July 15

The IRS has extended the tax-filing deadline for 2019 federal income tax returns from April 15 to July 15. The extension of the tax-filing deadline also postpones the deadline for making 2019 prior-year contributions to traditional and Roth IRAs from April 15 to July 15. This is good news for retirement savers, giving them a little more time to get their prior-year contributions done. To avoid confusion, anyone taking advantage of this postponed deadline should be sure to clearly indicate to the IRA custodian that the amounts contributed are 2019 prior-year contributions.

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CARES Act Waives Required Minimum Distributions From Retirement Accounts for 2020

Every month, IRA expert Ed Slott is taking your questions about Individual Retirement Accounts on AARP:

How will the coronavirus bill deal with required minimum distributions? What advantages/disadvantages are there in skipping a year's RMDs? -J.W.

Among the numerous provisions of the massive aid package, the Coronavirus Aid, Relief, and Economic Security Act or CARES Act, are waivers for 2020 required minimum distributions (RMDs).

Waiver of RMDs — How the new rules will work

We saw this in 2009, and now here again Congress has provided relief by allowing all RMDs due in 2020 to be waived. You don't have to take them, which in turn will reduce your 2020 tax bill.

Who can qualify?

Q: My dad was 86 when he died and I inherited half of his IRA, which I elected to stretch. Am I correct in thinking that since I am not yet 70 ½, I am not allowed to direct qualified charitable distributions (QCDs) from this IRA? Please advise.

Answer

Q: I took my 2020 RMD in full about 6 weeks ago. I'm wondering if the RMD waiver for 2020 can be applied retroactively, allowing me to roll back or otherwise undo this unfortunate distribution. My 60-day rollout clock (if it applies) is ticking!

Answer

Q: With the COVID-19 changes to push the tax filing back, can someone still make a 2019 contribution until that date or do all contributions need to be made by the usual April 15th deadline this year?

Answer

Q: When I move my 401(k) to an IRA, I understand that I have to take the RMD first. Can I use that RMD as a QCD?

Answer

Have a question for our IRA Technical Team?
Email your questions to us at [email protected]. Selected questions will be featured every Thursday in the Slott Report.

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