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.
All requests for a CRD must be received in good order by 3 PM CT December 30, 2020. This deadline includes obtaining a plan sponsor or spousal signature if required. You must meet one of the CRD qualification conditions and either:
AIG RS 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 distribution all in 2020 income or in equal amounts in 2020-2022 income. CRDs will be reported on IRS Form 8915-E. You also can 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 received. Recontributions will also be reported on IRS Form 8915-E.
This distribution can be recontributed to your plan account as a rollover – if the plan allows such rollover contributions – or any other employer plan that will accept the contribution or an IRA by completing an AIG RS CARES Act Distribution Repayment Form (in development). The form includes remittance instructions.
No, but if your employer plan still requires an RMD to be taken, the distribution will not be considered an RMD because of the CARES Act and can be rolled over to an employer plan (which may include your employer’s plan) that accepts rollovers or to an IRA within 60 days of the distribution.
Either your request was not correctly recorded and/or your plan sponsor did not adopt the CARES Act RMD waiver provision.
The RMD distribution cannot be reinstated to your account but it can be rolled over to a retirement plan account that will accept the rollover or IRA within 60 days of the date of the distribution.
If you are more than 60 days past the date on the distribution check, and do not qualify for a coronavirus-related distribution (CRD), there are no other options available. If you meet one of the CRD qualification conditions, and you have not already exceeded the $100K limit for CRDs, then all or a part of the distribution may be treated as a CRD for tax reporting and recontribution purposes.
Generally, if an RMD is due and not taken, there is a 50% excise tax payable by the taxpayer who fails to take the RMD. For 2020, though, even if your employer plan requires you to take an RMD, it will not be considered an RMD for tax purposes and no excise tax will be assessed for failure to take an RMD.
For Federal income tax reporting purposes, the RMD that you repaid was a distribution that is reported on a 2020 Form 1099-R and treated under the CARES Act as a direct rollover into your account.
Yes. An employer is not required to adopt CARES Act provisions for a SEP-IRA account holder to waive 2020 RMD.
AIG RS will automatically re-amortize loans at the time loan payments re-start (or start) in January, 2021. The re-amortization will include any interest accrued during the 2020 deferral period and extend the term by one year. This will change the payment amount and you will receive a letter with details specific to your loan.
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.
*Please note that this is intended to be informational only, and is not intended as legal, tax or other advice to you. You should consult your tax advisor with respect to your personal tax matters, including any that may arise out of the CARES Act provisions.