June 9, 2020

Waiver of RMDs Under the CARES Act

By Victoria Pecora, Staff Accountant, Tax & Business Services

Waiver of RMDs Under the CARES Act Wealth Management

Several statutory changes to Required Minimum Distributions (RMD) from IRAs, SEP IRAs and Simple IRAs took effect in 2020.

The Secure Act, which went into effect on January 1, 2020, significantly changed the RMD age requirements, as follows:

  • For those born prior to July 1, 1949, an IRA owner must have taken their first RMD by April 1 of the year following the year they reach age 70 1/2.
  • For those born July 1, 1949, or later, an IRA owner must take their first RMD by April 1 of the year following the year they reach age 72.
  • Subsequent RMDs must be made annually by December 31.
  • If an individual has multiple retirement accounts, the RMD amount must be separately determined for each account, but the withdrawal may be taken from a single account.
  • Account owners are free to withdraw more than the calculated RMD amount.
  • Failure to take an RMD results in a 50% penalty tax by the IRS for the amount not withdrawn.

RMDs do not apply to Roth IRAs, which require withdrawals only after the death of the account owner.


The CARES Act was passed on March 27, 2020, to help stimulate and secure the economy in response to the COVID-19 pandemic and its effect on the financial stability of the United States. Included in the CARES Act is a provision that waives RMDs for 2020.

This applies to retirement account owners and any account beneficiary normally required to take a distribution.

Qualified individuals who took RMDs between February 1, 2020, and May 15, 2020, may reverse their distribution as follows:

  1. If the plan allows, an individual who took an RMD between these dates can roll the amount back to the retirement account before July 15, 2020, as long as there was not a completed a rollover within the past 365 days.
    1. The CARES act did not change the once-per-year rule in regards to IRA rollovers.
  2. Individuals who do not qualify for the rollover option and want to return the already-taken RMD must qualify under the “Coronavirus-Related Distribution” criteria:
    1. An individual qualifies if they are diagnosed with coronavirus, their spouse or dependent are diagnosed with coronavirus, or they experience financial hardships due to coronavirus (i.e., being laid off or having hours cut).
    2. If an individual meets these criteria, they can repay the distribution within the next three years.
    3. If the distribution is repaid within the next three years, the amount reverts back to the retirement account tax-free.

The elimination of RMDs under the CARES Act was designed to assist individuals who are struggling financially from the unforeseen effects of COVID-19 on the economy. There is still an opportunity to continue to make regular RMDs 2020. It is best to speak with your financial advisor prior to doing so.

For more information on the waiver of RMDs for 2020 or other provisions of the CARES Act, please contact your Marcum tax advisor.

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