Changes for the CARES Act have now been released for all programs. The CARES Act was passed in March 2020 to help relieve financial burdens caused by the coronavirus.
Among the various elements of the act, there are a handful of changes that affect taxes and required distributions from retirement accounts. Most of these changes only affect 2020, and will revert to normal in 2021.
TOTAL:
There are a number of changes in TOTAL to account for changes to the rules for tax-deferred retirement plans and itemized deductions:
- Retirement Plans (IRA, 401k, etc.):
- No RMDs will be calculated in 2020
- RMDs will resume as normal starting 2021
- Inherited IRAs:
- No RMDs will be calculated in 2020
- RMDs will resume as normal starting 2021
- 2020 will be ignored by 5 year rule, delaying when some individuals must empty the account
- Charitable Contributions:
- Up to 100% of AGI can be included in Itemized Deductions for the year 2020
- Limit returns to 60% starting 2021
- There is a permanent $300 above-line deduction starting in 2020
Silver:
Silver takes a broad look at taxes, only using an effective tax rate entered by advisors. Because of this, the only change that needed to be made was for tax-deferred retirement plans:
- Retirement Plans (IRA, 401k, etc.):
- RMDs will not be calculated in 2020
- RMDs will resume as normal starting in 2021
