The Coronavirus Aid, Relief and Economic Security (CARES) Act, which became law on March 27, 2020, includes a number of provisions to help ease the financial burden faced by retirees and savers due to the global pandemic. The CARES Act makes it easier for people to access their retirement savings. The Act includes distribution, loan and RMD waiver provisions.
AIG Retirement Services is required to report the distribution as income on a 2020 Form 1099-R. When filing your taxes for 2020, though, you will have the choice to either include the full distribution in 2020 income or in equal amounts in 2020-2022 income. The distribution amounts must be reported on IRS Form 8915-E, Qualified 2020 Disaster Retirement Plan Distributions and Repayments, to qualify for and receive the favorable CRD tax treatment. You also may recontribute all or any portion of a CRD within the three-year period beginning on the day after the date on which the distribution was made. Recontributions should also be reported on IRS Form 8915-E for favorable tax treatment.
For Federal income tax reporting purposes, the RMD was a distribution that is reported on a 2020 Form 1099-R and the repayment of your RMD is treated under the CARES Act as a direct rollover into your account.
If your employer plan adopted a new distribution event for birth or adoption withdrawals, you can request such a distribution, up to $5K per child, within one year following the birth or adoption. If the plan did not add a new distribution event and you are otherwise eligible for a distribution from the plan, you can treat that distribution as a birth or adoption withdrawal and avoid the 10 % early withdrawal penalty. Additionally, you may take such a withdrawal from an IRA.
* This material is general in nature, was developed for educational use only, and is not intended to provide financial, legal, fiduciary, accounting or tax advice, nor is it intended to make any recommendations. Applicable laws and regulations are complex and subject to change. Please consult with your financial professional regarding your situation. For legal, accounting or tax advice consult the appropriate professional.