The Coronavirus Aid, Relief, and Economic Security Act

IMPORTANT UPDATE
The Coronavirus Aid, Relief, and Economic Security Act

The Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was signed into law on March 27, 2020 to provide relief to Americans experiencing the effects of the 2020 coronavirus pandemic (COVID-19).  It makes several changes to rules regarding required minimum distributions (“RMDs”) and withdrawals from qualified accounts.  An RMD is the minimum amount you normally must withdraw from your qualified contract each year after you reach a certain age (70 ½ in 2019, 72 in 2020).

The following is a summary of the changes made by the CARES Act to the Individual Retirement Annuity (“IRA”) and 403(b) Tax Sheltered Annuity (“TSA”) rules.  The CARES Act contains many important provisions and we urge you to discuss its impact on your own financial and tax situation with a qualified tax professional*.  

Required Minimum Distributions

If you have an RMD due in 2020, you are no longer required to take it.   If you have scheduled an automatic RMD payment with us, please note that we will take no action unless you contact us and instruct us to suspend your remaining automatic RMD payment(s) for 2020.

IRA contributions

The tax filing deadline for 2019 has been extended from April 14, 2020 to July 15, 2020.  Due to this extension, 2019 IRA and Roth IRA contributions are allowed until July 15, 2020.

Premature distributions

If you are under age 59½ and facing virus-related hardships, you may withdraw up to $100,000, tax penalty free, from eligible qualified accounts between January 1, 2020 and December 31, 2020.  The relief covers the tax penalty only; any contractual withdrawal charges will continue to apply.

* Delaware Life does not provide tax or legal advice.  Any tax discussion is for general informational purposes only.  Clients should refer to their tax advisor for advice about their specific situation.

 

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