The law requires that participants who have attained a certain age and are no longer working begin taking distributions from their retirement accounts. These distributions are called Required Minimum Distributions (RMDs) and they are calculated based on the life expectancy of the participant and their beneficiary. These distributions must occur prior to the end of the calendar year (except for the very first RMD, which may be delayed until April 1st of the following year).

Up until the passage of the SECURE Act of 2019, the age where one must begin taking RMDs was 70 ½. With the passage of that law, the age was raised to 72, starting in 2020. Anyone who had not turned 70 ½ prior to 12/31/19 is subject to the new age of 72.

However, with the passage of the CARES Act, participants can opt out of the RMDs for the year 2020. We at Noble-Davis will calculate all RMD amounts for participants who have met the age requirement for an RMD, and will provide paperwork for those participants as normal. However, as that paperwork indicates, these distributions need not be taken, and participants will not incur a tax penalty for failing to take one.

Please feel free to contact us if you have any questions about how these two laws affect your plan.