The CARES Act waives RMDs in 2020 so that individuals and beneficiaries are not forced to take distributions from their retirement savings when their account balances are significantly lower than they were at year-end 2019.
The waiver applies to defined contributions plans (e.g., 401(k) plans, 403(b) plans and governmental 457(b) plans, as well as to IRAs for 2020:
- A participant who turned 70½ before 2019 does not have to take their 2020 RMD.
- A participant who turned 70½ in 2019 but was waiting until April 1, 2020, to take their first RMD is not required to take the 2019 RMD in 2020 or the RMD due for 2020.
- A participant who turned 72 in 2020 and would have been required to take their first RMD by April 1, 2021, does not have to take the RMD for 2020.
A beneficiary taking annual payments from an inherited account is not required to take a payment in 2020. If they are using the five-year rule to deplete the account, 2020 is not counted in the five years, which provides six years in total to deplete the account. The CARES Act did not address beneficiary distributions under the 10-year rule created by the SECURE Act; future IRS guidance may address this issue.
Individuals who receive an RMD in 2020 may roll over the RMD to an IRA or a plan that accepts rollovers. The rollover generally must be completed within 60 days, but because of an IRS extension, rollovers with deadlines between April 1 – July 15 may be completed by July 15. 