COVID Affects Required Minimum Distributions For 2020

COVID has affected many areas of our lives, including our finances.  In normal times, if you are age 72 or older, you’d be required to take a Required Minimum Distribution (RMD) from your IRA or other retirement accounts.  Because of COVID, under the CARES Act, that requirement is waived for 2020.

What this means for you:

  • If you don’t need the money for lifestyle, you can skip this year and allow the funds to continue to grow tax-deferred for another year.  If you need some, but not all, you can take what you need (and pay ordinary income tax on that portion).
  • Do some tax planning.  Consider your likely marginal income tax bracket this year versus 2021.  Even if you don’t need the money, it might make sense to go ahead and take the distribution if you’re in a particularly low tax bracket this year.
  • If you’ve already taken your RMD for 2020 but wish you hadn’t, you may still be able to reverse the transaction using the 60-day rule or by appealing to the IRS.

Details surrounding RMDs are complex.  Contact your tax or financial advisor before you take action.


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COVID Affects IRA Required Minimum Distributions

  • You can skip your 2020 distribution
  • Consider tax bracket for 2020 vs. 2021
  • You may return your 2020 RMD…maybe


Stewart H. Welch, III, CFP, AEP, is the founder of THE WELCH GROUP, LLC, which specializes in providing fee-only investment management and financial advice to families throughout the United States. He is the author or co-author of six books, including  J.K. Lasser’s New Rules for Estate, Retirement and Tax Planning- 6th Edition (John Wiley & Sons, Inc.); THINK Like a Self-Made Millionaireand 100 Tips for Creating a Champagne Retirement on a Shoestring Budget. Past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by The Welch Group, LLC (“Welch”), or any non-investment related content, made reference to directly or indirectly in this article will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. More information about The Welch Group and important Disclosures can be found on our website. Consult your financial advisor before acting on comments in this article.