With the economy being hit harder than we have ever seen before from the novel Coronavirus, Congress has tried to relieve American citizens bypassing the CARES Act (Coronavirus Aid, Relief, and Economic Security) Act.
Among the financial relief included in the CARES Act are exemptions from 2020 required minimum distributions or RMDs.
If you had RMDs due in 2020 from a company plan — such as a 401(k) or 403(b) plan, or IRA you qualify to have your RMDs waved. This also applies to beneficiaries, including those who have recently turned 70 1/2 in 2019 and were required to take their first RMD by April 1, the 2020 calendar year.
This is a perfect thing, especially with the stock market bouncing all over the place. If it were left in place, you might have been left paying a high tax bill on a value that no longer exists in the current market.
There is no downside to the waiver of RMDs. The benefits will hopefully help retirees recoup the losses from the downturn in the economy as a result of the Coronavirus.
Every retirement account is unique, and any decisions made should be discussed with an experienced financial advisor. It should be known once you convert to a Roth IRA, you cannot undo this action.
Read more about how the CARES Act will affect your retirement accounts https://www.aarp.org/money/investing/info-2020/cares-act-retiree-tax-benefit.html
Contact West Financial Group to discuss your financial future.