How is my IRA affected by the CARES Act?

by SouthStar BankAugust 10, 2020

Learn about recent IRA changes

Through the Coronavirus Aid, Relief, and Economic Security Act, known as the CARES Act, several provisions were made to help those financially or medically affected through these tough times. Although the CARES Act impacted more than individual retirement accounts (IRAs), the impact on IRAs is significant. IRA owners and beneficiaries of a deceased IRA owner should be aware of these changes in relation to their unique goals and circumstances.

THE 2020 REQUIRED MINIMUM DISTRIBUTION (RMD) HAS BEEN WAIVED

IRA owners and IRA beneficiaries are not required to take a distribution.
The RMD provision is applicable to any Traditional IRA, including Simplified Employee Pension (SEP) and Savings Incentive Match Plan for Employees of Small Employers (SIMPLE) IRAs.
If an IRA owner turned age 70.5 in 2019 and postponed his/her RMD after 2019 (until the required beginning date of April 1, 2020), the RMD is eligible to be waived.

THE RMD ROLLOVER DEADLINE HAS BEEN EXTENDED TO AUGUST 31, 2020

If you have already taken your 2020 RMD, you may have the opportunity to return funds as a rollover contribution. This is also applicable to surviving spouse beneficiaries.
Non-spouse surviving beneficiaries may rollover only the RMD death distribution amount received in 2020 back into the same IRA.

AUTOMATIC WITHDRAWALS ARE ELIGIBLE FOR REVISIONS

If you previously set up an annual RMD to be automatically withdrawn, you may contact your banker to revise the schedule. In most cases, including existing SouthStar Bank IRA Accounts, if you do not request an adjustment, it will be assumed that you intend the 2020 RMD to take place even though it is not required by law.

It is recommended that you consult a tax professional regarding your intentions when adjusting planned disbursements. If you have questions regarding your SouthStar Bank IRA account, we’re here to help. Please reach out by emailing contact.us@southstarbank.com or contacting your nearest SouthStar Bank branch.