Individual Retirement Account Changes:

What You Need to Know

Take advantage of the equity in your home!A number of changes and enhancements have been made to Individual Retirement Accounts (IRAs) as a result of two new laws - the SECURE Act, implemented at the end of 2019, and the CARES Act, signed into law in March 2020.

The changes provide retirement account customers with some added flexibility and offer some financial relief for those facing challenges as a result of the coronavirus pandemic. Here are some of the highlights:


IRA Contributions

  • The final date for Traditional and Roth IRA contributions for tax year 2019 has moved to July 15, 2020.

Temporary Waiver of Required Minimum Distributions

  • The mandatory distribution requirement for 2020 is waived for IRA owners and IRA beneficiaries.
  • Owners and beneficiaries who otherwise were required to take IRA distributions during 2020 (e.g., owners who had reached the age of 70½ in 2019 or earlier and beneficiaries who were required to withdraw Life Expectancy Payments) are not required to do so and instead have the option to take IRA distributions this year.

New Coronavirus-Related Distributions

  • Qualified individuals (including those diagnosed with the coronavirus disease, spouses or dependents of those diagnosed with the disease, and those who experience coronavirus-related financial hardship) may take IRA distributions.
  • Special tax treatment will apply to these Coronavirus-Related Distributions and they will be exempt from the early distribution penalty that typically applies to distributions taken by IRA owners who are under the age of 59½.

New Required Minimum Distribution Age

  • For individuals born after June 30, 1949, the age for required minimum distributions has changed. For these individuals, the deadline for taking the first required distribution is April 1 of the year following the year in which they turn 72.
  • Individuals born before July 1, 1949 must begin required minimum distributions by April 1 of the year following the year in which they turn 70½.

Age Limit for Traditional IRA Contributions

  • For the 2020 tax year and beyond, individuals who have earned income from employment may continue to contribute to their IRA beyond age 70½.

IRA Withdrawals for Births/Adoptions

  • Beginning January 1, 2020, qualifying individuals may withdraw up to $5,000 from an IRA before age 59½ during the 1-year period following the birth or legal adoption of a child, without incurring an early withdrawal penalty.

Withdrawal Options for IRA Beneficiaries

  • Non-spouse beneficiaries of IRA owners who pass away on or after January 1, 2020, generally must withdraw all inherited IRA assets by December 31 of the year during which the tenth anniversary of the IRA owner's death occurs.
  • Spouse beneficiaries generally will continue to have the option of treating an inherited IRA as his or her own, and now have the option, in some cases, to withdraw the proceeds over a 10-year period.

If you have questions about how these changes may affect you, we encourage you to seek the assistance of a tax or legal professional. Or, for information about an IRA at Burke & Herbert Bank, please visit your local Burke & Herbert Bank branch or call us 703-684-1655.

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