What Is the Required Minimum Distribution for 2020?

The Required Minimum Distribution (RMD) is the minimum amount that individuals must withdraw from their retirement accounts each year once they reach a certain age. The purpose of the RMD is to ensure that individuals begin to withdraw funds from their retirement accounts and pay taxes on those withdrawals.

For the year 2020, the RMD rules have changed due to the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The act waives RMDs for all types of retirement plans, including IRAs, 401(k)s, and 403(b)s, for the year 2020. This means that individuals who would have been required to take an RMD in 2020 can choose to skip it without penalty.

However, it is important to note that this waiver only applies to RMDs for 2020. Individuals who turned 70 ½ before January 1, 2020, are still required to take their RMD for the year 2019. Additionally, those who turned 72 in 2020 are still required to take their first RMD by April 1, 2021.

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Here are some frequently asked questions about the RMD for 2020:

1. Do I have to take an RMD in 2020?
No, the CARES Act waives RMDs for 2020.

2. What if I already took my RMD for 2020?
If you withdrew your RMD before the CARES Act was passed, you may be able to roll it back into your retirement account within 60 days.

3. Are inherited IRAs exempt from RMDs?
No, inherited IRAs are still subject to RMDs, but the CARES Act allows beneficiaries to skip their RMD for 2020.

4. Will RMDs resume in 2021?
Yes, RMDs will resume in 2021 unless further legislation is passed to extend the waiver.

5. Can I still take my RMD if I want to?
Yes, the waiver is optional, so if you need the funds or want to take advantage of other financial planning strategies, you can still take your RMD for 2020.

6. How are RMDs calculated?
RMDs are calculated by dividing the account balance by a life expectancy factor determined by the IRS.

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7. Are Roth IRAs subject to RMDs?
No, Roth IRAs are not subject to RMDs during the account owner’s lifetime.