Required Minimum Distribution - What You Need To Know
In response to the coronavirus pandemic, Congress passed the CARES act earlier this year to bolster the economy. One of the many changes of the CARES Act impacted Required Minimum Distribution (RMD) in 2020. RMD has been suspended so that you do not have to take RMD in 2020.
Required Minimum Distribution is the amount of money that must be taken out of an individual’s retirement account per IRS regulations. The government requires that the money be taken out at a certain point so that it can be taxed. The Federal Government is allowing people to keep the money in their IRA/retirement accounts this year to provide them with flexibility.
You Are Still Allowed To Take Money Out
Many people rely on distributions from their retirement accounts to cover monthly expenses. It is still completely fine to continue taking distributions this year. The purpose of this provision is to simply give you the option whether or not to take a distribution. If you have started taking your guaranteed income from an annuity, you may wish to continue taking the distributions since they are usually guaranteed for life regardless of market conditions. We recommend speaking with your advisor to review your specific circumstances.
If you do choose to take a distribution for 2020, that money is still subject to income tax.
It May Make Sense To Continue To Do Your Charitable Gifting Through QCD’s
It is likely still beneficial to continue doing your charitable giving through a Qualified Charitable Distribution (QCD) for tax purposes. Those who are 70 1/2 or older can participants in QCD’s to reduce their adjusted gross income (AGI) by gifting to charities directly from their retirement account.
If you have any specific questions or would like to discuss your own investment strategy or financial planning needs, we welcome you to call us at 302.234.5655 or email us at firstname.lastname@example.org to set up a mutually convenient date/time to speak.
The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation.
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