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Required Minimum Distributions (RMD) Have Been Suspended for 2020


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From Ameritrade:

The CARES Act that was signed into law on March 27 makes significant changes to your annual RMD. The most important change is that all RMDs have been suspended for tax year 2020, meaning you will not need to take an RMD from your retirement account for this year.

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I had to ask my friend, Mr. Google, what RMD meant. This is what he told me.

"Required minimum distributions, often referred to as RMDs, are amounts that U.S. tax law requires one to withdraw annually from traditional IRAs and employer-sponsored retirement plans. In the Internal Revenue Code itself, the precise term is "minimum required distribution". Wikipedia"

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.... and if you have already taken it, there is now a way to 'send it back'.... do a king's-X.   BUT there are limitations:  this only applied after a certain date in 2020.... for example NOT if you took it in Jan or Feb when corvid was 'not a big thing'. AND, the last date I understand that one may 'send it back' is.... July 15. Since today is July 12th that doesn't give one much time to act successfuly.

FWIW, I had already taken a large one when I found out I did not have to and could send it back.  I decided that I just didn't want to try that and 'fight the bureaucracy' when the 'new' program didn't work like it was supposed to work..... aka some stimulus checks, sending checks to dead people, not sending checks to some who should be getting them, giving churches billions of dollars in small business aid when they were already flush.... etc etc etc

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The CARES Act also pushed the age for the first required withdrawal from age 70 1/2 to age 72. The RMD is computed based on the balance in the retirement account (SEP or IRA) as of December 31 of the year prior to distribution.

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  • 1 month later...

There is one other thing to consider if you are skipping the RMD in 2020 and have unrealized capital gains in a taxable stock market account. There is zero tax on capital gains up to a certain income level. That all depends if you are filing single or joint. If you do have unrealized long term capital gains  this would be a good year to sell the stock, pay nothing or nearly nothing in taxes and then reinvest the proceeds. You can't sell a stock, take the gain and then repurchase it or one substantially similar unless you wait 30 days to avoid the wash rule.

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John,

The wash sale rule only applies if taking a loss.

The 0% long term cap gain rate applies on taxable income less than $78,750.

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