Need Postponement of RMD (Required Minimum Distribution) Withdrawal from Retire. Acc.

[hollywoodz]

Anyone that is over 70&1/2 that has a retirement account must make IRS required withdrawals every year, called RMD (Required Minimum Distribution) on which taxes are paid the following year. With the bloodbath these accounts have taken by the markets plummeting due to the virus (20%+?), and the senate working on a 3rd stimulus package, we need to call Senators Rubio and Scott's offices ASAP to have any such RMDs for this year postponed. Having to make these withdrawals from depleted accounts that a lot (most?) of us count on for daily living is a "double whammy" none of us can afford. This probably affects the majority of Villagers, I imagine. The senate switchboard number is, 202-224-3121. Time is of the essence Villagers!

[John41]

I agree. Fortunately I took my RMD in January before the market downturn.

[M2inOR]

The Secure Act that was passed by Congress and signed into law by President Trump in December 2019 changed the timing for RMDs. They now start at age 72.

What Is the SECURE Act and How Could It Affect Your Retirement? (https://www.investopedia.com/what-is-secure-act-how-affect-retirement-4692743)

Yes, worthwhile to ask fo a delay, and have a better understanding of how to calculate the amount considering the big decline in recent weeks.

[hollywoodz]

But if there is a change in the RMD rules for 2020, you might have withdrawn an amount in 2020 that you did not have to. That is the point. The recent bloodbath in all such accounts is the reason that a postponement of one year in having to make any such withdrawals should be undertaken by the IRS!

[hollywoodz]

The SECURE Act does not apply to those of us that reached 70&1/2 BEFORE July 1, 2019!!!

[Carla B]

You may recall that It was done in 2009, during the Great Recession, so there is precedent.

[44Apple]

Not going to happen. The Federal government needs some money to come into its coffers to try to offset the large outlay that is about to happen as well as the massive spending done by Trump during his first three years.

[hollywoodz]

Don't be so sure that it will not happen. Key Members of the Senate Finance and Ways and Means Committees are in discussions to do it, with the backing of financial houses like Morgan Stanley and organizations like the AARP and inclination by Congress to also do it. The senior population is also a MAJOR voting block, particularly in states like Florida. It will not look at all politically savvy to stiff seniors by forcing them to withdraw an RMD amount for 2020 out of a disastrously depleted retirement caused by the virus and the lack of a real timely federal government response when other segments of the population are going to be helped by the next stimulus package. Stiffing the older generation will not be in the cards by Trump and his backers.

[hollywoodz]

You are so right about the precedent set in 2009!

[rjm1cc]

If you do not need the RMD you can move stock from your retirement account to your taxable brokerage account. Thus you can retain your position in the stock until it recovers. You will also get capital gains treatment for the appreciation when the market recovers. Depending on your tax situation you may be eligible for a zero tax on your capital gains.

[hollywoodz]

But whether you move your stocks from a retirement account into a brokerage account, the law requires you to pay taxes on the amount required of you to be withdrawn. So, your suggestion does not alleviate the fact that for 2020 you still need to withdraw an amount upon which then you have to pay the taxes by April 15, 2021. Again, the ONLY remedy given my initial posting is to have Congress remove the requirement of an RMD for this (2020) year!

[justjim]

Anyone that is over 70&1/2 that has a retirement account must make IRS required withdrawals every year, called RMD (Required Minimum Distribution) on which taxes are paid the following year. With the bloodbath these accounts have taken by the markets plummeting due to the virus (20%+?), and the senate working on a 3rd stimulus package, we need to call Senators Rubio and Scott's offices ASAP to have any such RMDs for this year postponed. Having to make these withdrawals from depleted accounts that a lot (most?) of us count on for daily living is a "double whammy" none of us can afford. This probably affects the majority of Villagers, I imagine. The senate switchboard number is, 202-224-3121. Time is of the essence Villagers!

A great idea and that would help a number of retirees.

[retiredguy123]

Anyone that is over 70&1/2 that has a retirement account must make IRS required withdrawals every year, called RMD (Required Minimum Distribution) on which taxes are paid the following year. With the bloodbath these accounts have taken by the markets plummeting due to the virus (20%+?), and the senate working on a 3rd stimulus package, we need to call Senators Rubio and Scott's offices ASAP to have any such RMDs for this year postponed. Having to make these withdrawals from depleted accounts that a lot (most?) of us count on for daily living is a "double whammy" none of us can afford. This probably affects the majority of Villagers, I imagine. The senate switchboard number is, 202-224-3121. Time is of the essence Villagers!
Postponing the RMD this year would reduce your 2020 taxes. But, if you have a balanced portfolio of stocks, bonds, and cash, with 30 percent in stocks, then your total investments are only down about 10 percent so far this year, and we haven't even gone through the first quarter. So, I think it is too soon to pass a law that would postpone the RMD.

[biker1]

I don't see what the issue is. Make a withdrawal from your non-equity retirement funds, such as bonds. Surely you don't have all of your retirement account funds in equities?

Anyone that is over 70&1/2 that has a retirement account must make IRS required withdrawals every year, called RMD (Required Minimum Distribution) on which taxes are paid the following year. With the bloodbath these accounts have taken by the markets plummeting due to the virus (20%+?), and the senate working on a 3rd stimulus package, we need to call Senators Rubio and Scott's offices ASAP to have any such RMDs for this year postponed. Having to make these withdrawals from depleted accounts that a lot (most?) of us count on for daily living is a "double whammy" none of us can afford. This probably affects the majority of Villagers, I imagine. The senate switchboard number is, 202-224-3121. Time is of the essence Villagers!

[hollywoodz]

Then call Senators Rubio and Scott ASAP!

[hollywoodz]

This is a reply to "biker1", who says he/she does not see a problem with making an RMD withdrawal this year. The problem is clear as day: the present IRS law says YOU have to make a withdrawal from your retirement account this year. It does not matter whether you have bonds, stocks, cash, etc. in that retirement account. So whatever total value you have, it will be reduced by the amount you have to withdraw. Just how many retirees have all cash in a retirement account so as not to be affected by the plummeting stock market (and it will continue), which would be earning less than .50% or so and on which any retirees live on and pay daily expenses. More often than not, every such retirement account has been grievously affected by the downturn in the present market, so if you say there is no problem in reducing such an account by the amount of an RMD this year, you probably would be a person I would not want to come any where near my account. Let's hope the Treasury Secretary or Members of Congress think differently; they sure did when the 2009 financial crisis hit, when the RMD withdrawal was postponed for a year.

[biker1]

OK, I will explain it to you. You were complaining that you had to take RMDs from a retirement account that had dropped in value. Well, only the equity portion of your retirement account has dropped in value. Don't take RMDs from the equity portion of your account (that is down in value but will recover with time). Redeem from bonds and cash - the non-equity portion of your account. They haven't dropped in value. If you are at an age where you need to take RMDs then you should have a significant portion in non-equities. Yes, your total account is down in value but the equity portion will recover - let it ride. Also, the amount you need to redeem is a percentage of the account value. Since the total account value is down you won't have to redeem as much. It is not up to the Government to fix poor money management on your part.

This is a reply to "biker1", who says he/she does not see a problem with making an RMD withdrawal this year. The problem is clear as day: the present IRS law says YOU have to make a withdrawal from your retirement account this year. It does not matter whether you have bonds, stocks, cash, etc. in that retirement account. So whatever total value you have, it will be reduced by the amount you have to withdraw. Just how many retirees have all cash in a retirement account so as not to be affected by the plummeting stock market (and it will continue), which would be earning less than .50% or so and on which any retirees live on and pay daily expenses. More often than not, every such retirement account has been grievously affected by the downturn in the present market, so if you say there is no problem in reducing such an account by the amount of an RMD this year, you probably would be a person I would not want to come any where near my account. Let's hope the Treasury Secretary or Members of Congress think differently; they sure did when the 2009 financial crisis hit, when the RMD withdrawal was postponed for a year.

[retiredguy123]

I would be opposed to postponing the RMD. People should pay their taxes. These taxes were only deferred, not forgiven. So, if you are in your seventies, it is time to pay up.

[rustyp]

I am opposed to postponement also. We all had time to rebalance the portfolio to minimize loss. That's the way free markets work. The news from overseas was out there long ago. For every buyer there must be a seller. Giving an investor a bailout will create false sense of security for the future and could result in taking more risks and overbuying - very similar to buying on margin which artificially drives up the market.

[hollywoodz]

Late last night, the senate passed the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act), H.R. 748. It contains a section 2203, at pp. 167-171, titled "Temporary Waiver of Required Minimum Distribution Rules for Certain Retirement Plans and Accounts". The way I read this section, any RMD that was required to be withdrawn in 2020 is waived. But don't rely on my read of this section; ask your accounting professional for expert advice.