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Dated: April 1, 2020

On March 27, 2020, President Trump signed into law the CARES Act in response to the widespread negative economic impact resulting from the current COVID-19 crisis. There are many facets in bill ranging from small business activities to individual income tax planning.

One item relevant item to some of our clients is the suspension of Required Minimum Distributions from any retirement plan for 2020. This applies to Traditional IRAs, SEP IRAs, SIMPLE IRAs, 401(k), 403(b), Governmental 457(b) plans and inherited IRA accounts.

For those who have their retirement account managed by FCA, we will review your individual circumstances in the coming weeks, and provide specific advice as needed. For others who complete the required distribution themselves, we recommend reviewing your options with your financial planner and your tax preparer before proceeding.

If you have already made retirement account distributions in 2020 but would benefit from suspending, you may be able to return those distributions to your account and reduce your 2020 taxable income and tax liability. The two options for accomplishing this are:

Indirect Rollover Back into Your Retirement Account·

  • The rollover must take place no later than 60 days after the date of distribution.
  • The option is not available if you have completed an indirect rollover in the previous 12 months.
  • There is no dollar limit.

Establishing the Distribution as a Corona-Related Distribution
·

  • Applicable to distributions of up to $100,000 made in 2020
  • Recipient must be impacted by the Coronavirus because they:
    • Were diagnosed with COVID-19;
    • Have a spouse or dependent diagnosed with COVID-19;
    • Experience negative financial consequences as a result of being quarantined, furloughed, laid off, or have reduced work hours because of the disease;
    • Lack childcare as a result of the disease and therefore cannot work;
  • Own a business that is operating under reduced hours or has closed due to the disease; or
  • Meet other criteria that is accepted by the IRS.