22 Oct Do I have to take a retirement withdrawal this year?
Q. I have a question about my position for tax year 2020. I turned 70.5 in 2019 and took my first Required Minimum Distribution (RMD) that year. I was 71 almost the entire 2020 year and will be 72 in February 2021. Does the change in age requirement to 72 allow me to skip taking a distribution for tax year 2020 or do I have to continue since I already started taking distributions?
A. There’s been a lot of confusion over the changes in the rules.
The SECURE Act of 2019 extended the age requirement for taking required minimum distributions from 70 ½ to 72 years of age for anyone reaching age 70 ½ on or after Jan. 1, 2020, said Jean McAllister, a certified financial planner with Peapack Private Wealth Management in Bedminster
She said because you turned 70 ½ before Jan. 1, 2020, the age 72 provision does not apply to you and you must continue to take annual RMDs.
That said, the CARES Act, passed into law in March 2020, allows anyone already required to take minimum distributions to forego doing so for 2020, she said.
This provision would apply to you.
“Designed to preserve your retirement account(s) during a period of steep market decline, this law allows you to skip taking all — or a portion — of your Required Minimum Distribution for 2020,” she said. “This is not a postponement, but a one-time elimination of all or part of your 2020 distribution.”
Your regular Required Minimum Distributions will resume on Jan. 1, 2021, and will be calculated according to the standard formula with no regard to 2020 distribution activity, McAllister said.
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This story was originally published on Oct. 22, 2020.
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