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The Coronavirus Aid, Relief, and Economic Security (CARES) Act rolled through Congress and was signed by President Trump this week. While most of the law is devoted to providing economic stimulus for businesses, a few provisions change some of the rules for retirement plans.

Required minimum distributions (RMDs) are suspended for 2020. All RMDs are suspended, including those for inherited IRAs as well as traditional IRAs of those over age 70. Think carefully about whether to take advantage of this suspension. If the effects of the pandemic dropped you into a lower tax bracket, it might make sense to take the RMD (and perhaps a bit more) out of the IRA this year while youre in a lower tax bracket.

If you already took the 2020 RMD, you will have to include it in gross income and pay taxes on it. But you might have some options. You have up to 60 days to return a distribution to an IRA or deposit it in another qualified retirement account without owing taxes on it. You also might convert the amount into a Roth IRA.

Since the tax return filing deadline for 2019 income tax returns was extended to July 15, the deadline for making a 2019 contribution to an IRA also is extended to July 15, 2020.

The 10% penalty for taking early distributions from qualified retirement plans, including IRAs and 401(k)s, is waived. The waiver applies to distributions taken between January 1, 2020 and December 31, 2020. Up to $100,000 of distributions can avoid the penalty.

Other rules related to retirement plan distributions are suspended or modified in the CARES Act. The mandatory 20% income tax withholding for rollover distributions is suspended during this period. In addition, income taxes on a coronavirus-related distribution can be paid over a three-year period. The individual also has up to three years to recontribute the amount to a plan or IRA. An in-service distribution from a qualified retirement plan also is permitted if it is coronavirus-related.

Retirement plan loan rules also are modified. The maximum loan amount is increased for loans that are made between the date of enactment of the CARES Act (March 27) and December 31, 2020. Normally the loan maximum is $50,000 or 50% of the vested account balance. During this period the maximum loan is doubled to the lower of $100,000 or 100% of the vested account balance. The due date for repayment of the loan is delayed one year.

To qualify for these IRA and retirement plan changes, a loan or distribution must be coronavirus-related. That means the individual, the individuals spouse or a dependent must have been diagnosed with COVID-19. Or the individual must experience adverse financial consequences as a result of being quarantined, furloughed, laid off or having work hours reduced due to COVID-19. Also eligible are individuals who were unable to work due to lack of child care as a result of COVID-19. An individual whose business was closed or had reduced operating hours as a result of COVID-19 also is eligible. A retirement plan administrator can rely on an individuals certification that he or she meets the requirements.

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IRA And Retirement Plan Changes In The CARES Act - Forbes