2020 Changes to Individual Retirement Accounts
Setting Every Community Up for Retirement Enhancement (SECURE) Act
Effective January 1st, 2020, here are a few highlights of the SECURE Act:
- Required Minimum Distributions begin at age 72, previously 70.5.
- You can continue to contribute to your Traditional IRA after age 70.5 so long as you have earned income.
- Payout for beneficiaries of IRAs must be taken within 10 years, with some exceptions.
- IRA withdrawals for birth or adoption expenses, up to $5,000 may be taken out penalty-free.
Coronavirus Aid, Relief, and Economic Security (CARES) Act
The CARES Act had several provisions that effect IRA holders such as:
- Required minimum distributions (RMDs) are suspended for 2020.
- IRA holders under 59 1/2 can take a distribution from their IRAs up to $100,000 without a penalty for Coronavirus related purposes.
Taxes will still apply, but can be spread over 3 years or the distribution can be repaid within 3 years and no taxes would have to be paid.
IRS Extends Tax Filing Deadline to July 15th
The extension of the tax filing date further affects IRA holders by:
- Allows prior year contributions to extend to the new July 15th filing date.
- Additional information available at: IRS.gov.
