Individual Retirement Accounts

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The CARES Act suspends required minimum distributions (RMDs) for 2020. (02 Apr 2020) While investors who have already taken their required minimum distributions for 2020 appear to be out of luck, the government has offered some reprieve for others: 2020 RMDs have been permanently suspended. With the historic market losses of the first quarter, this is being done to allow those people who were required to take distributions the ability to keep all of their funds working in qualified accounts as the markets stage a comeback. In addition to this relief, 2020 is also the first year of the new required beginning date (RBD) of age 72. The silly half-year rule is no longer in effect ("70 1/2 years old in prior year of distribution..."), which means investors no longer need to calculate when their half-birthday was: if you were 72 in the prior year, an RMD is required. Not counting 2020, that is. Not only has roughly $10 trillion worth of investment value been shaved off of portfolios since mid-February, many companies will be whittling down their dividends to preserve much-needed cash for the economic recovery period. Those are the first two punches income-oriented investors are now facing; the third is the ultra-low interest rates being offered in the bond market, with a Fed funds rate of 0%. We can't see the third condition changing anytime soon.