IRS Extends RMD Rollover Period to August 31, Provides Additional Guidance
The IRS issued a notice on June 23 regarding the CARES Act waiver of 2020 required minimum distributions (RMDs). Under the notice, anyone who already took an RMD in 2020 from certain retirement accounts may roll that money back into a retirement account.
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More Individuals Qualified for CARES Act Coronavirus-Related Retirement Plan Distributions, Loans Under New IRS Guidance
Also Increases Loan Amounts, Includes Temporary Suspension of Repayments
The IRS has published guidance regarding CARES Act provisions on Coronavirus-related distributions and loans from retirement plans. The CARES Act provided relief from the 10 percent penalty and 20 percent mandatory withholding on “Coronavirus-related distributions” of up to $100,000 from retirement plans and IRAs. It also provided for an increase in retirement plan loans and a temporary suspension of loan repayments.
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Clayton Urges Increased Care for Retail Investors in Wake of Pandemic
Also Confirms June 30 Reg BI, Form CRS Compliance Date
Saying the effects of the COVID-19 pandemic “weigh substantially in favor of implementing Reg BI and Form CRS requirements as soon as practicable,” SEC Chairman Jay Clayton confirmed in a recent public statement that the June 30 compliance date for Form CRS and Regulation Best Interest (Reg BI) remains in effect. He also expressed strong concerns about the marketing of certain investments and strategies to retail investors, who may have a greater need for cash due to the pandemic. He calls on firms to focus on several areas to make sure that they are providing advice in the best interest of retail investors.
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IRS Issues FAQs on CARES Act Retirement Plan, IRA Provisions
Upcoming Guidance to be Consistent with 2005 Katrina Guidance
The IRS has issued new FAQs on CARES Act provisions related to retirement plans and IRAs. The IRS and the Treasury Department are also developing additional CARES Act guidance, to be released in the near future, that will be similar to guidance that applied to the treatment of distributions and plan loans by victims of Hurricane Katrina.
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CARES Act Provisions Related to Retirement
The Coronavirus Aid, Relief, and Economic Security Act (the CARES Act) includes a number of provisions related to retirement that are of importance to investment advisers and their clients. For defined contribution plans and individual retirement accounts (IRAs), there is relief from required minimum distribution requirements and early distributions. There are also changes in provisions related to loans from retirement plans, and some short-term funding relief to certain defined benefit plans. Finally, additional flexibility is provided to the Secretary of Labor related to ERISA deadlines.
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