CARES Act – RMD Update

Required Minimum Distributions, or RMD for short, have received a considerable amount of attention from Congress over the last six months. As touched on earlier this year by Thomas Talbott, the SECURE Act raised the RMD age to age 72 for certain individuals. For more details on that change, please take a moment to read his blog post from January: 3 Ways the New SECURE Act Might Affect You

Fast forward a few months and suddenly COVID-19 began spreading around the world causing massive disruption to individual’s personal lives and businesses worldwide. To try and lessen the blow for investors, Congress passed an additional law that would affect RMD’s for 2020, the CARES Act. The CARES act included Congress’s suspension of RMD’s for 2020.

What does this mean for you? If we had set up your RMD to automatically be taken every year, your custodian TD Ameritrade has automatically suspended that distribution. When you are meeting with your advisor, we will be discussing the option to continue taking the RMD to supplement your income. However, if you do not need to take your RMD to cover living expenses then there is nothing you need to do.

Also considering RMD’s 2020 suspension, it still might make sense for some of you over age 70½ to continue using your IRA for your charitable giving. You might not be able to deduct any charitable contributions from your taxes if you no longer itemize. Therefore, using your IRA allows you to maintain your nonprofit giving while not increasing your taxes.