All required Minimum Distributions (RMDs) are suspended for 2020 including those for inherited IRAs and Traditional IRAs of those over age 70 1/2.
2020 RMDs that have already been taken will be taxed as regular income. A provision in the act will allow the return of a distribution if the funds are returned by August 31, 2020.
The 10% penalty on IRA withdrawals for individuals under 59 1/2 is waived. The waiver applies to distributions taken between January 1, 2020 and December 31, 2020. Up to $100,000 of distributions can avoid the penalty. Income taxes on a coronavirus-related distribution can be paid over a three-year period.
To qualify the IRA distribution exception, the purpose must be coronavirus-related.
- The individual, the individual’s spouse or a dependent must have been diagnosed with COVID-19, or the individual must experience adverse financial consequences as a result of being quarantined, furloughed, laid off or having work hours reduced due to COVID-19.
- Individuals who were unable to work due to lack of child care as a result of COVID-19.
- An individual whose business was closed or had reduced operating hours as a result of COVID-19.
To delay your Red Wing Credit Union IRA RMD for 2020 or to roll over your previous 2020 RMD, please contact our office at 651-267-4223 or 651-267-4219.