Understanding How the CARES Act May Impact Your IRA

What individuals with IRAs and other types of retirement plans should know about the CARES Act.
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The Coronavirus Aid, Relief, and Economic Security Act, or CARES Act, which was signed into law by President Trump on March 27, 2020, has far-reaching impact for Americans. While most of the law is devoted to providing economic stimulus for businesses, several provisions change some of the rules currently in place for IRAs and other types of retirement plans.
Keep in mind that in addition to the CARES Act relief measures listed in the summary below, the IRS has already announced that the April 15, 2020 deadline for filing an individual tax return for 2019 has been extended to July 15, 2020. This is also the new due date for making IRA contributions for the 2019 tax year.
Here’s what individuals with IRAs and other types of retirement plans should know:
 1. Up to $100,000 of “Coronavirus-Related Distributions” (known as CRDs) can be taken at any time in 2020 and repaid within three years
Repayments can be made all at once or over multiple installments
Repayments may be made in as many installments as necessary within three years of taking the distribution and are not held to the “once per 12-month” restrictions of other IRA rollovers
The tax liability can be extended evenly over three years, whether or not you replace these distributions with new contributions
You are not required to decide if you will replace the distribution amount when you take your distribution
 2. The 10% premature distribution penalty is waived for clients under 59 ½
No special reporting has been created for this relief, so all early coronavirus-related distributions will be coded as “premature distributions” by financial institutions

3. All required minimum distributions (RMDs) for 2020 are waived
This includes 2019 RMDs that were delayed until April 1, 2020, as well as the 2020 RMDs for Traditional, SEP, SAR-SEP, SIMPLE, and all Inherited IRAs
Please contact your Financial Advisor immediately if you have scheduled RMD payments that you would like to cancel
At the time of this publication, the IRS has not issued guidance on whether or not RMDs already taken in 2020 can be “undone”. For non-inherited IRAs:
60-day rollover rules may apply
If the RMDs are eligible to be considered “coronavirus-related distributions,” then they can be rolled back into your IRA
Inherited IRAs are not permitted to accept an IRA rollover, so without further IRS guidance, there will be no options to roll over an RMD back into an Inherited IRA.
All 2020 RMD requirements are waived, regardless of eligibility. However, items 1 and 2 above are only available for those eligible to take “coronavirus-related distributions.”

According to the CARES Act, you are as eligible if:
  • You, your spouse, or a dependent are diagnosed with coronavirus
  • You experience adverse financial consequences as a result of the virus or disease
  • Other factors as determined by the Secretary of the Treasury (or the Secretary’s delegate)
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