The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) became law on March 27, 2020. Below are highlights relevant to retirement accounts. More information will become available as implementation details emerge. If you or a family member has tested positive for COVID-19, there are additional tax and withdrawal provisions available. Please contact us for personalized guidance.

• Required Minimum Distributions (RMDs) for 2020 are waived. This helps retirees avoid withdrawing based on pre-pandemic portfolio values and allows more time for portfolios to recover before future withdrawals.
• RMDs already taken in 2020 are considered standard distributions and may be returned to the account within 60 days. These are then treated as rollovers. Note: this option does not apply to inherited IRAs (except for surviving spouses).
• The CARES Act does not mention Roth IRAs directly, but this may be an opportune time to consider converting taxable retirement assets into Roth IRAs due to:

– Lower current account values
– Suspended RMDs
– No income or balance limitations for conversions
– Tax-free withdrawals (after the 5 — year rule)
– Potentially lower taxes due to reduced taxable income this year

Other Roth IRA considerations:

• Taxes are due on the converted balance
• Earnings are tax-free if no withdrawals are made within five years
• Partial or full conversions are allowed
• Roth IRAs retain tax-free status when inherited
• Note two caveats:
  1. A 10% penalty applies to early withdrawals within the first five years (unless exceptions apply)
  2. Non-spouse beneficiaries must withdraw the inherited Roth IRA within a limited time frame

We are monitoring ongoing developments and will keep you informed as the situation evolves.

Katz Family Financial