Upcoming Tax Opportunities Deadlines

An IRA or certain other retirement plan owner or beneficiary who has already received a distribution of an amount that would have been an RMD in 2020 but for the 2020 RMD waiver rule or the SECURE Act, which increased the age at which RMDs must begin from 70½ to 72 after 2019, the recipient may repay the distribution to the distributing IRA or retirement plan, even if the repayment is made more than 60 days after the distribution, provided the repayment is made no later than August 31, 2020.

Generally, participants in certain workplace retirement accounts including 401(k)s, 403(b)s, and 457 plans are allowed to borrow up to $50,000 or 50% of their vested balance, whichever is less, from the account. Your employer doesn’t have to permit retirement plan loans, but most do. The CARES Act bumps the allowable loan limit up to 100% of the vested balance or $100,000, whichever is less. The option is available for any loans taken out during the six-month period from March 27, 2020 to September 22, 2020.

Normally, participants must repay standard retirement account loans within five years. The CARES Act allows borrowers to forgo repayment during 2020, and starts the five-year repayment period in 2021, giving borrowers an extra year to repay their loans. However, the loan will continue to accrue interest.

The rules governing the above updates can be complex. Please contact our tax professionals at (973) 298-8500 if you have any questions or would like us to review your situation before you make any decisions.