IRA and Retirement Plan Changes for 2020 that Benefit Financially-Distressed Individuals (IRLD)

Michael J. Tucker, JD, CPA, Edward A. Renn, Esq., Heather L. Schreiber, RICP, Denise Appleby, MJ, APA, CISP, CRPS, CRC
  • 3
  • Update
  • Taxes
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Individual course: $91
Best Value: All-Star Tax Season Pass
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Overview

In response to the extraordinary financial challenges posed by the coronavirus (COVID-19) pandemic, the Coronavirus Aid, Relief, and Economic Security (CARES) Act provides owners of IRAs and employer sponsored retirement plans (employer plans) accounts, who were impacted by the COVID-19 pandemic, the opportunity to take COVID-19 related distributions and plan loans in 2020. COVID-19 related distributions are eligible for tax advantages, which includes: a waiver of the 10% early distribution penalty that generally applies to distributions taken before the account owner reaches age 59 ½ , three years to rollover the distributions, and the eligibility to spread the income from the distribution over three years.

For employer plans which allow it, the CARES Act increases the plan loan limit to $100,000 from $50,000 and the percentage rate from 50% to 100%.

The distribution rules that applied to the beneficiaries of  IRAs and employer plans changed with the enactment of the Setting Every Community Up for Retirement Enhancement Act of 2019, (SECURE Act) in December, 2019, limiting the distribution options that apply to designated beneficiaries. Unless a legislative change occurs, these SECURE Act changes apply starting in 2021.

The panelists will review many of the most important, newly enacted SECURE Act changes that take effect starting in 2021 and the year 2020 changes brought about by the CARES Act. 

Major Topics:

  • SECURE Act 10-year required minimum distribution (RMD) rule
  • Waiver of RMDs for 2020
  • How to determine if a taxpayer is impacted by the coronavirus pandemic for purposes of taking tax-advantaged distributions from qualified plans and IRAs and tax advantaged loans from qualified plans
  • Rollover options associated with RMDs taken early in 2020
  • Distinguishing between eligible designated beneficiaries and beneficiaries who are not eligible designated beneficiaries under the SECURE Act
  • Coronavirus- related distributions from IRAs and qualified plans
  • Elimination of the age requirement for making IRA contributions
  • Special rules relating to loans from qualified plans for 2020
  • Recontributions of coronavirus related IRA and qualified plan distributions

Learning Objectives

  • Advise clients regarding new IRA and qualified plan changes

Tax practitioners who anticipate advising clients regarding IRAs and qualified plans

A basic understanding of the tax rules relating to individual income tax

None

Yes

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