- The Income Tax filing and IRA prior year contribution deadlines have been extended
- The traditional IRA required minimum distributions have been waived for 2020
- IRA penalties waived due to the coronavirus (COVID-19) for withdrawals in 2020
New 2020 Tax Laws
With the outbreak of the coronavirus (COVID-19), the federal government has made new law changes to provide some financial flexibility and relief for Americans. Please read the bullets below to find out how or if your tax situation is affected by these federal law changes. Similar changes may have been made in your state regarding some of the topics below. Please consult a professional advisor for tax, legal, and investment advice applicable to your circumstances. For more information, please refer to www.irs.gov.
Income Taxes and Making IRA Prior Year Contributions
- The deadline to file federal income taxes has been moved from April 15, 2020 to July 15, 2020.
- The due date for contributing to an IRA for 2019 similarly has been extended from April 15 to July 15.
- Also, based on a prior law change, contributions can be made to a Traditional IRA by persons over 70 ½, subject to IRS limits, if they have earned income.
Required Minimum Distribution (“RMD”)
- Required minimum distributions (RMDs) from Traditional IRAs for 2020 are waived.
- 2019 RMDs are also waived if it was your first year and if you did not take your RMD by April 1, 2020.
- Account holders can still take their 2020 RMD if they choose to.
- If an account holder has already taken their 2020 RMD, they generally cannot put this distribution back.
- In 2020, early withdrawals (prior to reaching age 59 ½) up to $100,000 can be taken without the federal 10% early withdrawal penalty tax.
- To be eligible, the account owner or their spouse needs to be diagnosed with COVID-19, or they must experience negative financial consequences including but not limited to being laid off, quarantined, furloughed etc.