With the Coronavirus Aid, Relief, and Economic Security (CARES) Act enacted into law, Treasury is issuing clarifying guidance at a fast and furious pace.
Many practitioners are aware that the Setting Every Community Up for Retirement Enhancement (SECURE) Act, with a few exceptions, eliminated the option for beneficiaries to stretch distributions over their life expectancies and requires designated beneficiaries to take distributions under the 10-year rule. However, because it is new, many practitioners are unaware of the latest retirement account provisions made under the CARES Act. In addition, the IRS has postponed deadlines for eligible individuals affected by the COVID-19 pandemic.
For instance, did you know that the July 15, 2020 postponed IRA contribution deadline applies to both traditional and Roth IRAs? The mailbox rule is applicable here. Have you considered sending your clients able to take advantage an email advising them to have these contributions postmarked by July 15th? For some taxpayers, the 2019 1040 liability could be reduced. We do not need to go over the basic rules of the income phase-out for IRA contribution deductions in this forum, but such a communication would be welcomed by your clients since they may not be thinking of an already filed 2019 1040. Goodwill considerations for creating a potential refund and the attendant 1040X fees abound. These are the business pointers successful practices utilize as a matter of course to augment client retention and firm profit.
We’ll give you one more tip here gratis. If your client already took his or her 2020 RMD, remember those funds can be rolled over within the applicable time but are subject to the Bobrow rule, under which a taxpayer is limited to one IRA-to-IRA rollover per 12-month period. The 12-month period begins on the date the distribution is received.
Want to hear more invaluable tips such as these and be able to discuss retirement provision changes authoritatively with your clients? You should because your competition certainly will be looking to do just that. Join us for COVID-19 IRA and Plan Provision Contributions, Distributions, and Loans (ACV9) with multiple webinar dates available. Our expert faculty will comprehensively cover the relevant provisions of the CARES Act, and attendees will be provided with reference guides for utilization in their own practices. Don’t miss this opportunity to learn crucial practice pointers that your clients will undoubtedly appreciate.
Denise Appleby, JM, CISP, CRC, CRPS, CRSP, APA is CEO of Appleby Retirement Consulting Inc., a firm that provides IRA tools and resources for financial and tax professionals. She has over 20 years of experience in the retirement plans field and has co-authored several books and written over 500 articles on retirement rules and regulations. Denise is also CEO of www.retirementdictionary.com , a free consumer website about retirement accounts rules and regulations. For more about Denise, visit her website at www.DeniseAppleby.com.
Nick Spoltore is VP of Tax & Advisory Content for Surgent CPE. Mr. Spoltore is a graduate of the University of Notre Dame and of Delaware Law School. Before joining Surgent, he practiced tax and business law at the firm of Heaney, Kilcoyne in Pennsylvania and also in Delaware.