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Why the CARES ACT Waives RMDs

By LouAnn Schulfer, AWMA®, AIF®
Accredited Wealth Management AdvisorSM
Accredited Investment Fiduciary®

Required Minimum Distributions (RMD’s) are just as they sound:  a minimum amount that is required to be distributed from a retirement account each year after you reach a certain age as an account owner, or in a specified schedule after you inherit a retirement account as a non-spouse beneficiary.  The IRS website has great detail, leading off with the statement “You cannot keep retirement funds in your account indefinitely.” (1)

RMDs are based off the account value on December 31 of the previous year that the distribution must be taken, using the Uniform Lifetime Table provided by the IRS.  On March 27, 2020, in response to the COVID-19 global pandemic, Congress passed the Coronavirus, Aid, Relief, and Economic Security (CARES) Act.  One of the provisions was a suspension of RMD’s during 2020, applying to Traditional IRAs, SEP IRAs, and SIMPLE IRAs, as well as 401(k), 403(b) and Governmental 457(b) plans. The relief applies to both retirement account owners who are themselves subject to RMDs, as well as to beneficiaries who have inherited retirement accounts, including ROTH IRAs, and are otherwise subject to RMDs.

Since the distribution amount is based off of the previous year’s market value, and many retirement accounts are invested in securities which are subject to market fluctuation, the volatility of 2020 could potentially cause a distribution to be taken at a substantially lower market value than the 12/31/2019 calculation was based on.  Selling low can be damaging to a portfolio’s long-term value.  The suspension of the RMD allows time for recovery of the investment’s value.

RMD rules and the timing of a distribution can be complex, therefore this information is not intended to be a substitute for specific individualized tax advice. I suggest that you discuss your specific tax issues with a qualified tax advisor.


LouAnn Schulfer is co-owner of Schulfer & Associates, LLC Wealth Management and can be reached at (715) 343-9600 or

Securities and advisory services offered through LPL Financial, a Registered Investment Advisor.  Member FINRA/SIPC.