Attention Retirees: You Need to Know This New IRS Rule About Required Minimum Distributions
2020 has been a tumultuous year for the stock market, which can be worrisome for retirees who rely on their investment accounts to provide essential income. To help out seniors who may not want to take money out amid the market volatility, the Coronavirus Aid, Relief, and Economic Security (CARES) Act suspended required minimum distributions (RMDs) for 2020.
RMDs are mandated for those over 70 1/2, or over age 72 depending on when you turned 70 1/2. They're required for certain tax-advantaged accounts, including 401(k)s and traditional IRAs, and they can have major tax consequences since you have to pay ordinary income tax on withdrawn funds.
The suspension of the RMD requirements for this year provides seniors with much-needed flexibility, which likely comes as a relief to those who would prefer to leave their funds in their tax-advantaged accounts and not owe income tax for mandatory distributions taken this year.
Source Fool.com
