The Coronavirus Aid, Relief, and Economic Security Act (commonly referred to as the CARES Act) was signed into law by President Trump, following bipartisan support, on March 27, 2020. In total, this was a $2.2 trillion-dollar stimulus package. Since then, there have been discussions in Washington D.C. regarding a second and third round of stimulus packages, which would be passed into law and provided to the American people.
The CARES Act fundamentally changed retirement accounts and taxation of retirement accounts on a limited basis. Specifically, retirement accounts and the taxation of retirement accounts were altered in the following manner:
- Required Minimum Distributions Are Waived for 2020 – Resulting in income tax deferral on those distributions until the end of 2021
- Contributions to retirement accounts are extended to July 15, 2020
- 10% early withdraw penalty waived for withdrawals up to $100,000 in 2020
- Taxation of ordinary income on withdrawals from retirement accounts can be delayed for up to two years
- Consider a Roth conversion – income tax rates scheduled to expire on December 31, 2025
- 60% AGI limitations on cash distributions to charity are suspended. Allows 100% deduction on cash distributions to charity
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These are just a few of the changes to retirement accounts and the taxation affecting retirement accounts due to the CARES Act and other legislation passed in the last few years.
If you have questions about taxation of retirement accounts — or any other tax questions regarding the CARES Act, call us at (513) 241-0400 or use our contact form to schedule a time to discuss how we can help you and your family.
The attorneys at Aronoff, Rosen & Hunt, LPA are here to help you!