Deadline for RMD's

 I do need to remind retirees of a deadline coming up on August 31st about RMD’s, required minimum distributions for 2020.

In March Congress waived the RMD requirement for all types of retirement accounts including IRAs, 401(k)s, 403(b)s, 457(b)s, and inherited IRA plans.

If you withdrew money earlier this year and don’t need it to live on, then you have until Aug. 31 to return it if you don’t want those funds counted toward your income for the year. Returning an unwanted RMD to your account can save you on income taxes for the year. Also, if your RMD would have pushed you into a higher income bracket with your premium for Medicare or on your Social Security, then this could save you money. Make sure the money is received by August 31st, not postmarked by then.

How this works, wherever your qualified money is being held will send you a Form 1099-R when you withdraw money from your retirement account and a Form 5498 when money is contributed to the account. Hang onto both for when you file your 2020 taxes. Another key point: Many people automate their RMD withdrawals. Those who turned that function off for this year should make sure to turn it back on for next. The penalty for skipping an RMD is hefty: 50% of the money you didn’t distribute on time.

If you have any questions call 320-679-5183 or go to yoursafemoneyshow.com.