RMD Rule Changes

Submitted by Matt Mason on Mon, 2020-01-13 15:04

Person turned 70.5 in 2019, but since they were working through the end of 2019 delayed and hasn’t taken yet. They had planned on taking before April 1, 2020 and subsequently taking the additional RMD for 2020 also.

For 2019 RMD that the RMD rules have changed to age 72, are they still required to the the 2019 RMD they didn’t take last year as their first year distribution?

For 2020 RMD, they will only be age 71 this year so I presume under the new ruling they would not have to take an RMD this year.

Last part, I didn’t know how the QCD part was affected along with this age change. This person was going to send some of this 2019 and 2020 RMD to a charity as a QCD.

Thanks
Matt



Submitted by Alan - IRA critic on Mon, 2020-01-13 16:30

  • If this is an IRA account, the still working exception does not apply, therefore the usual IRA rules are in force. Since the person reached 70.5 in 2019, the delay of RMDs to age 72 will not affect them and he must take distributions for 2019 (can delay up to 4/1/2020), 2020, 2021 etc.  Therefore, both the 2019 and 2020 RMDs will be taxable in 2020.  
  • To be clear, no taxpayers will be able to take advantage of the delay of RMDs until age 72 if they reached 70.5 prior to 2020.
  • QCDs can still be made at age 70.5 as before.  The person can still do a QCD to offset his 2019 and 2020 RMDs.  The QCD timing requirements remain as before, so the person must be sure not to complete the RMD for a year before doing the QCD for that year. Since the person will have 2 RMD years to be distributed, they still have considerable flexibility with the QCD timing. Nothing will be reported on the 2019 since there were no IRA Distributions taken.

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