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AFTER CORONAVIRUS-RELATED DISTRIBUTIONS – NOW WHAT?

Coronavirus-related distributions (CRDs) are no more. Millions of Americans took advantage of the opportunity to make penalty-free withdrawals from their IRAs and 401(k) plans in 2020. But unless Congress resurrects them, CRDs are no longer available. Yet the economic damage caused by the pandemic is still very much with us. So, without CRDs, where do you turn for money to pay your bills?

2020 Year-End Retirement Account To-Do List

The end of 2020 is almost here. With the end of the year come certain retirement account deadlines. Here are 5 items you should have on your 2020 year-end retirement plan to-do list: 1. Do a 2020 conversion If you are considering converting an IRA to a Roth IRA in 2020, time is quickly running out. The deadline for 2020 conversion is the end of the calendar year. There is a common misconception that a conversion can be done up until your tax-filing deadline.

CRDs Are Still Available

The year 2020 has been a challenging one. With coronavirus cases rising in most of the country and economic relief stalled in Congress, many individuals may be looking to find funds to pay urgent bills. One possibility is a coronavirus-related distribution (CRD). While the first phase of the pandemic may be gone, the economic turmoil is still with us and so are CRDs. CRDs are still available through December 30, 2020. These are distributions, up to $100,000, from a company plan or IRA made anytime during 2020 (through December 30) to affected individuals.

RMDs and CRDs under the CARES Act: Today's Slott Report Mailbag

Question: An 85-year-old died in 2020 and left his IRA to his 53-year-old son. Father did not take 2020 $107,000 RMD. Does the son have to take it? Does the son have to take anything in first 9 years, including this RMD? Thank you. Answer: The CARES Act waived RMDs for IRAs in 2020. Even if an IRA owner dies in 2020, his year-of-death RMD still falls under the waiver. So, the $107,000 did not need to be withdrawn by the father, and it does not need to be withdrawn by his son beneficiary.

SECURE ACT SUCCESSOR BENEFICIARY RULES AND PAYING BACK CORONAVIRUS-RELATED DISTRIBUTIONS: TODAY’S SLOTT REPORT MAILBAG

Question: Ed and team, I am sure my question has been asked by others. Now under the SECURE Act with no more stretch features to an inherited IRA, if a person dies and leaves his IRA to a child and that child waits 9 years and 11 months after the year of death and named his children (taxpayer’s grandchildren) as his successor beneficiaries, do they have only one month to clean out the IRA or does the 10 year period begin all over.

IRS Expands Eligibility for Coronavirus-Related Distributions

On June 19, the IRS released additional guidance on coronavirus-related distributions (CRDs) from retirement accounts. The new guidance will make many more individuals eligible for these tax-advantaged distributions allowed under the CARES Act. What Is a CRD? If you qualify as an “affected individual”, you can take up to $100,000 of distributions from your IRAs and employer plans in 2020. There is no 10% early distribution penalty if you are under age 59 ½, and you have an option to spread the federal tax on CRDs evenly over a three-year period beginning with the year 2020. You also have a three-year period to repay CRDs to an IRA or employer plan. Taxes can be refunded on the amounts repaid. Repayment does not have to be made to the same IRA or company plan from which the CRD was originally paid.

Special Needs Trusts and CRDs: Today's Slott Report Mailbag

Question: Under the SECURE Act, if we can assume a Special Needs Trust can qualify for the stretch via the disabled beneficiary, what happens when the special needs trust beneficiary passes? The next named beneficiary (remainder) is a brother and/or nephew under this trust. Yet it's already an inherited IRA. Would that formula continue to the next remainder beneficiary in line, i.e., would the stretch continue? Answer: The SECURE Act left many questions unanswered, especially when it comes to trust beneficiaries, but your situation may have an answer. You are correct that, under the new law, there are special rules for a trust for disabled or chronically ill beneficiaries that allow RMDs to be paid from the IRA to the trust using the beneficiary’s life expectancy.

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