The Coronavirus Aid, Relief, and Economic Security Act (CARES Act), signed into law on March 27, 2020, provides a temporary waiver of the required minimum distribution (RMD) rules for certain retirement plans and accounts for RMDs which otherwise would be required to be made to plan participants during 2020.
Affected plans include defined contribution plans such as a 401(k) or 403(b) plan, as well as 457(b) plans sponsored by a state — or by any state agency, instrumentality or political subdivision — and individual retirement accounts (IRAs).
Under Section 2203 of the CARES Act, RMDs which otherwise would be required to be made to a participant by an affected plan for 2020 are not required to be made. For a participant whose required beginning date occurs in 2020 — for example, someone who reached age 70½ in 2019 — but with respect to whom no RMD was made prior to Dec. 31, 2019, both the initial RMD due April 1, 2020, as well as the RMD for the calendar year 2020 due Dec. 31, 2020, are waived. The CARES Act does not impact the provision under the recently enacted SECURE Act that increased the age at which RMDs must begin to 72 for individuals who had not attained age 70½ by the end of 2019.
An employer wishing to offer this relief to the participants in its affected plan(s) should operate the plan(s) consistent with the CARES Act RMD relief. The CARES Act provides such employers until the last day of the first plan year beginning on or after Jan. 1, 2022, or 2024 in case of a governmental employer, to adopt a conforming amendment to its affected plan.
Please visit our COVID-19 Toolkit for all of Taft’s updates on the coronavirus.