The CARES Act Provides Relief for IRA Owners in a Turbulent Market

Many retirees are worried about taking a required minimum distribution (RMD) in a down market and uncertain times. On March 27, 2020, President Trump signed the Coronavirus Aid, Relief, and Economic Security (CARES) Act into law, which alleviates this worry by suspending RMDs for 2020.

Congress’s aim in suspending RMDs was to provide relief to IRA owners from taxes owed on RMDs that were based on higher 12/31/19 market values. Since 12/31/19, the S&P 500 index has fallen 19.6% in the first quarter of 2020. Fortunately, the average Mission client has not experienced significant declines in account values.

The RMD suspension also applies to 1) IRA owners that turned 70 ½ in 2019 and deferred their first RMD to April 1, 2020, thus deferring both the 2019 and 2020 RMD, and 2) inherited IRAs. For those required to deplete an IRA account within five years, the year 2020 will not count in determining the five-year factors.

What happens if you’ve already taken your 2020 RMD? If you took your 2020 RMD within the last 60 days, it may be rolled back into the account or into another non-Roth IRA account without owing taxes on the distribution. Each IRA owner is allowed one rollover per 12 months, so, if you have already used the rollover feature in the past year, this option may not be available. If you took your RMD more than 60 days ago, the CARES Act does not provide relief. The IRS may change this rule and allow IRA owners to return the RMD to the IRA beyond the current 60-day limit, but this has not been announced.

The deadline for making contributions to an IRA has been extended to July 15, 2020. If you choose to take advantage of the contribution extension, make sure you clearly indicate that the contribution is for 2019.

We encourage you to speak with your tax advisor about the CARES Act and how it impacts you.

Mission Management & Trust Co. serves as an IRA custodian and investment manager. We stay on top of developments to keep our clients informed about changes that may affect their accounts and planning. If you would like more information on opening an IRA with Mission, please contact us at

By Leah Geistfeld, CTFA, Trust Officer

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