The Secure Act, which President Trump signed into law in December, raised the age when IRA holders have to start drawing down their accounts via required minimum distributions to 72 from 70 ½.
Now the IRS has issued guidance with details on the change, Financial Advisor IQ reports. Although the guidance is aimed at financial institutions, it could be helpful for individuals.
The IRS notification clarifies that IRA owners who will turn 70 ½ in 2020 will not have an RMD beginning on April 1, 2021.
That’s in line with the IRS’s rule of thumb for determining the beginning date of a taxpayer’s first RMD: April 1 of the year following the calendar year in which a taxpayer hits the age threshold that’s in force.
IRA holders who turned 70½ in 2019 are subject to the old, pre-Secure Act threshold and must take their 2019 RMDs. In its guidance, the IRS is encouraging financial institutions to remind these IRA holders to take their RMDs by April 1 of this year, according to Financial Advisor IQ.
Also in the guidance: Financial institutions that act as trustees, custodians or issuers maintaining IRS must submit forms by June 1, 2020, to IRA owners who have RMDs due for 2020. These firms also must provide the owners with RMD statements by Jan. 31, 2020 informing them of their RMD deadline as well as the amount they must withdraw (or an offer to calculate that amount upon request).
This article was written by Ross Snel from Barron’s.
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