07/16/2020

IRS Guidance Provides RMD Rollover Relief

Discover more about what this could mean for you and your staff

The CARES Act was enacted to mitigate the economic effects of the COVID-19 pandemic. Among other things, it extends favorable tax treatment to qualified individuals who take so-called coronavirus-related distributions (CRDs) from IRAs, 401(k) plans and certain other retirement plans.

Specifically, the CARES Act waives the 10 percent early distribution penalty for CRDs taken between Jan. 1, 2020, and Dec. 30, 2020. Under the law, the waiver applies to CRDs made to an individual:

• Who is diagnosed with COVID-19,
• Whose spouse or dependent is diagnosed with COVID-19, or
• Who experiences adverse financial consequences as a result of COVID-19. These include being quarantined, furloughed or laid off; having work hours reduced; being unable to work due to lack of child care; closing (or reducing the hours of) a business owned by the individual; or other factors determined by the Treasury Secretary.

IRS Notice 2020-50 expands the definition of qualified individuals for purposes of CRDs and plan loans to take into account additional factors, such as a reduction in pay or self-employment income, the rescission of a job offer and the delay of a start date for a job. In addition, the definition now also considers adverse financial consequences arising for the impact of COVID-19 suffered by an individual’s spouse or household member.

Please select this link to read the complete blog post from OSAE Strategic Partner Clark Schaefer Hackett.