CARES Act: An RMD Holiday

a note from Bob on March 31, 2020

Congress and the President have been working overtime passing legislation to fight the effects of the Coronavirus. One recent item (the CARES Act) allows you to completely forgo your Required Minimum Distribution for 2020. This is an RMD holiday and presents some never-before-seen planning opportunities.

We understand many investors supplement their income from Social Security and other sources with their RMD. However, if you are one of the estimated 20% of Americans who do not need their RMDs for current income, below are just a few of the many ideas to consider:

1. Simply skip your RMD and pay less in income taxes for 2020;
2. Forgo your RMD, and with less income, consider a Roth IRA conversion;
3. If you need your RMD for living expenses but have other reserves or investments, skip or reduce your RMD and use other resources to make up the difference;
4. Many investors count on income tax withholding from their RMDs. You can easily reduce the RMD to have only taxes withheld. This will lighten the tax burden.

This hardly scratches the surface of the benefits in this Act. We will be reaching out to all our clients to discuss how this opportunity may benefit them, but please don’t wait if you would like to speak with us now. Call us