An underpublicized provision of the federal CARES Act offers a tax savings for many retirement-age Americans and could buy time for retirement portfolios to recover from the market downturn. 

Last month we published a summary of

recently enacted financial relief measures

for individuals and businesses. The summary included some major provisions of the federal CARES Act.

The $3 trillion package was so enormous that relatively little attention has been paid to one provision that, for roughly one in five retirement-age Americans, represents a significant tax savings: the waiver of

required minimum distributions

(RMDs) from individual account retirement plans* and individual retirement accounts (IRAs) for 2020.

The new CARES Act allows account owners to:

  • skip their 2019 RMD –


    it was their first year


    they had not yet made an RMD by April 1, 2020; and

  • skip their 2020 RMD.

The CARES Act waiver means that you are not required to withdraw your RMDs from your retirement plan or IRA in 2020 if you:

  • reached age 70½ in 2019 or before; or

  • attain age 72 in 2020; or

  • first

    attained age 70½ in 2019 and delayed taking your first RMD until 2020 (which, under normal circumstances, must be withdrawn by April 1, 2020).

The waiver also applies if you have an RMD requirement for 2020 and are a beneficiary (a) under an inherited IRA or (b) of a deceased participant who had an account in a retirement plan.

Furthermore, if you are a beneficiary required to take all distributions from the plan or IRA within five calendar years following the death of the participant in the retirement plan or the IRA account holder, the 2020 year does not count in determining your five-year period.


The waiver of the RMD requirement does not apply to benefits payable from a defined benefit plan, as such benefits are typically paid in the form of a lifetime annuity.

Aside from the tax benefits, the waiver allows your RMD to remain in your portfolio, where it may help your portfolio recover from the recent market volatility.

RMD Rollbacks.

There have been conflicting reports about the fate of 2020 RMDs taken before the CARES Act went into effect. Initially, some articles said that, if you took your RMD before the waiver became available, you could not pay it back, and what you withdrew would be taxable.

While that may be technically true, you may have options. If you have already taken your RMD for 2020, you may be able to “rollback” the withdrawal to your retirement plan, if your plan accepts rollbacks, or to your IRA

within 60 days from the date of withdrawal.

This rollback option is not available for 2020 RMDs received by a beneficiary under an inherited IRA or of a deceased participant in a retirement plan.

See Also:

  • The Top 8 Must-Know Rules for COVID-19 RMD Waivers Under the CARES Act



    , 4-13-20

  • What the CARES Act Means for You

    ,” Vanguard, 4-24-20

  • CARES Act Drastically Changes Required Minimum Distribution Rules for 2020



    , 4-30-20

*Individual account retirement plans include 401(k), profit sharing, 403(b) and state-sponsored 457(b) plans, and in this article are referred to collectively as “retirement plans.”