ComplianceMay 22, 2020

CARES Act includes IRA provisions: Coronavirus-related distributions and 2020 RMD waiver

On March 27, 2020, the President signed the Coronavirus Aid, Relief, and Economic Security Act, also known as the CARES Act. Included in the legislation are some significant retirement plan provisions including the ability to take penalty-free distributions from an individual retirement account (IRA) for Coronavirus purposes and a waiver of 2020 required minimum distributions (RMDs).

Coronavirus-Related Distributions

Section 2202 of the CARES Act includes a provision allowing an affected IRA owner younger than age 59½ to take distribution(s) from his/her IRA during 2020 for Coronavirus purposes without incurring an additional 10 percent tax for early withdrawal. Such distributions have an aggregate limit of $100,000 per individual if taken from more than one retirement plan. Furthermore, such distribution(s) can be included in income ratably over a three-year period and repaid within three years after taking it.

Waiver of 2020 Required Minimum Distributions (RMDs)

Section 2203 of the CARES Act contains what is likely the most significant provision relating to IRAs as it provides a waiver of the RMD requirement for 2020. This includes minimum distributions that would otherwise have been required for traditional (including simplified employee pension – SEP) and Savings Incentive Match Plan for Employees of Small Employers (SIMPLE) IRA owners and beneficiaries, and for Roth IRA beneficiaries.

An interesting element of this provision allows IRA owners that attained age 70½ in 2019, and therefore have a required beginning date of April 1, 2020, to also skip their 2019 RMD if it has not yet been taken. Whether the Internal Revenue Service will allow an IRA owner who in 2020 had already taken what at the time was an RMD to complete a rollover of the distribution is not yet known.

An additional point to make as it relates to beneficiary RMDs applies to those individuals that were taking death distributions under the five-year rule before 2020. In this case, these individuals will not be required to count 2020 as part of the five-year period to complete distribution of an inherited IRA, essentially giving them six years to complete distribution of the IRA.


Wolters Kluwer will continue to analyze the CARES Act’s impact on IRAs. We expect updated rules as well as additional information and guidance to be forthcoming from the IRS.

For an opportunity to learn more about IRAs and other tax advantaged accounts, including Health Savings Accounts and Coverdell Education Savings Accounts, consider our On-Demand Video Training. For more information call us at 1-800-552-9408.

Mike Schiller
Manager, Specialized Consulting, Tax Advantaged Accounts
With more than 26 years of experience, Mike has worked closely with hundreds of financial organizations to help them create, implement, and maintain their tax-advantaged accounts program.
Explore related topics
STAY INformed
Sign-up for our monthly IRA newsletter
Keep up with the latest Tax Advantaged Accounts news.