IRS Grants Relief For 2020 RMDs

The IRS recently granted additional relief for retirement account owners due to Covid-19. Generally, when a person attains age 72 (previously age 70 ½) that person is required to begin taking required minimum distributions ("RMDs") from their retirement account each year based on their life expectancy. Individuals with inherited IRAs are required to take annual RMDs regardless of their age.

The CARES Act, enacted earlier this year, provides a waiver of RMDs for defined contribution plans (such as 401(k) and 403(b) plans) and IRAs for 2020. Instead of being required to take an RMD in 2020, an account owner can leave the RMD amount in the account, thereby avoiding taxable income and earning additional tax-deferred growth. Additionally, the IRS recently expanded this relief in Notice 2020-51 by allowing an account owner who has already taken an RMD in 2020 to repay those funds to the retirement account and avoid recognizing such income. An account owner has until