The Coronavirus Aid, Relief and Economic Security (CARES) Act provides two relief options on qualified annuity contracts that you may want to consider. We encourage you to talk with your financial professional or tax advisor to understand your specific situation.
- Waiver of Required Minimum Distribution (RMD) for 2020: RMDs can be requested to be waived from defined contribution plans (such as 401(k) plans and 403(b) plans) and IRAs. The waiver applies to any distribution that is required to be paid in calendar year 2020. In other words, individuals have the option to not take a distribution that would normally have been required in 2020. This includes RMDs (stretch payments) for beneficiaries.
- Coronavirus-Related Distributions (CRDs): Withdrawals from qualified plans, 403(b) plans, and IRAs may qualify for special tax treatment. Aggregate distributions taken in calendar year 2020 for an individual that don’t exceed $100,000 and qualify as “coronavirus-related” will be exempt from or treated as an exception to some existing requirements on early distributions. For example, distributions that qualify under the CARES Act will not be subject to the 10% early distribution federal additional tax, and any taxable income attributable to the withdrawal can be spread over a three-year period beginning in the year the distribution would otherwise be taxable. Distributions may also be repaid at any time over a three-year period commencing on the date the distribution was received. Amounts can only be repaid to a qualified plan or an IRA that is eligible for contributions. Please note, this relief was not extended to cover withdrawals from nonqualified annuity contracts.
If you had an RMD due in 2020, we have sent you a letter at your mailing address with additional information. If you have not already received it, you should receive the letter shortly.
Learn more on the CARES Act FAQ page.