THE ‘CARES’ LAW – How Does It Help You?

The “CARES” Act (Coronavirus Aid, Relief, and Economic Security Act) was signed into law on March 27, 2020.  While the 880-page law covers many different areas, we will look at only the section dealing with retirement plan required minimum distributions. 

With the SECURE Act, the beginning age for RMDs (required minimum distributions) was raised to 72 years and caps the distribution period at 10 years.  So, please don’t confuse the SECURE and CARES.  The SECURE Act sets a new precedent that is permanent.  The CARES Act is for the year 2020 only. 

If you have begun to take RMDs from your retirement plan, the CARES Act suspends distributions for almost all plans for 2020 for employees, IRA owners or beneficiaries.  If you are an employee or an IRA owner and have received a distribution for 2020, you may be able to roll those distributions into an IRA.  However, if you are receiving distributions as a beneficiary, this option is not available to you.

If you have a Required Beginning Date (RBD) in 2020 for a retirement plan, any RMDs will be able to be suspended in 2020.  It is advisable to check with the plan administrator or financial institution to confirm that your RBD would qualify for postponement. 

Just as there are many remaining questions about the SECURE Act, there are many questions about the CARES Act.  Speak with your financial advisor or plan administrator if you feel you would want to suspend any retirement distributions in 2020. 

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Kay Sowa

About the Author

Kay Sowa is a paralegal in the Trusts and Estates Group at Capehart & Scatchard, P.A. She is an IRS Enrolled Agent, an Accredited Estate Planner®, and a Certified Trust and Financial Advisor. She oversees the trust and estate administration practice for the firm. She is an accomplished author and lecturer who has frequently spoken on behalf of a number of organizations including the National Business Institute and the Institute of Paralegal Education.

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