CARES Act 2020
Provisions in the Coronavirus Aid, Relief and Economic Security (CARES) Act affect your Star One IRA.
The CARES Act (Coronavirus Aid, Relief and Economic Security Act) contains provisions that affect retirement savings arrangements such as IRAs and other eligible retirement plans—401(k), 403(a), 403(b) and governmental 457(b) plans.
At Star One Credit Union, we strive to provide the best service possible by helping you understand the benefits.
Please contact your Tax or Financial Advisor for questions on how the CARES Act may affect you.
Extended Tax Filing Deadline
- The CARES Act extended the income tax return filing and payment deadline from April 15, 2020, to July 15, 2020.
Extended IRA Contribution Deadline
- The CARES Act legislation extended the carryback-contribution deadline for tax year 2019 to July 15, 2020.
Required Minimum Distributions Waived
Individuals, including beneficiaries, will not be required to take their 2020 required minimum Distributions (RMDs) from their defined contribution plans or IRAs.
- This RMD waiver would also apply to individuals who turned 70½ in 2019 but did not take their RMD before January 1, 2020.
- The 2020 year will not be counted for purposes of a five-year payout period for a beneficiary. (This provision will not alter a required beginning date for years after 2020.)
Coronavirus-Related Distributions (CRDs) Allowed
Up to $100,000 in Coronavirus-Related Distributions (CRDs) can be withdrawn by an individual from eligible retirement plans—exempt from the 10-percent early-Distribution penalty tax.
- A CRD is defined as any Distribution made on or after January 1, 2020, and before December 31, 2020, to a qualified individual, defined as:
- an individual (or the spouse or a dependent of that individual) who is diagnosed with COVID-19 or SARS-CoV-2 in an approved test; or
- an individual who suffers related adverse financial consequences, or suffers from other factors as determined by the Secretary of the Treasury.
- CRDs will be treated as meeting retirement plan Distribution requirements, so long as all Distributions do not exceed $100,000 to an individual.
- There will be a three-year repayment period beginning the day after Distribution, during which one or more repayments may be made, not to exceed, in aggregate, the amount distributed. Taxpayers can recontribute these amounts to an eligible retirement plan or IRA.
- CRDs that are recontributed within the three-year period will be treated as having satisfied the general 60-day rollover requirement.
- CRDs will be taxed ratably over a three-year period, unless an individual elects otherwise.