CARES Act Extends Several Filing Deadlines and Includes Retirement Plan Provisions
By Douglas McAlpine, Esq., CPA
CARES Act Notice 2020-23 updates portions of Notices 2020-18 and 2020-20 which extended the filing deadline from April 15, 2020 to July 15, 2020. The new Notice provides that many filings originally due between April 1, 2020 and July 15, 2020 are now due on July 15, 2020.
For individual income tax filers, your normal filing deadline is now July 15, 2020 and your first and second quarter estimated payments are also due on July 15, 2020. If additional time to file is needed beyond July 15, 2020, an extension of time to file can be submitted at that time extending the due date to October 15, 2020.
CARES Act Includes Retirement Plan Provisions
The retirement plan provisions of the CARES Act waives the minimum required distribution (RMD) rules for certain defined contribution plans and IRAs for calendar year 2020. This provision provides relief to individuals who would otherwise be required to withdraw funds from such retirement accounts during the economic slowdown due to COVID-19. If you have already taken your 2020 required RMD, you can return the payment if the RMD was taken within 60 days.
Consistent with previous disaster-related relief, the provision waives the 10% early withdrawal penalty for distributions up to $100,000 from qualified retirement accounts for coronavirus-related purposes made on or after January 1, 2020 and before December 31, 2020. In addition, income attributable to such distributions is subject to tax over three years, and the taxpayer may re-contribute the funds to an eligible retirement plan within three years without regard to that year’s cap on contributions.
A coronavirus-related distribution is one made to an individual: (1) who is diagnosed with COVID-19, (2) whose spouse or dependent is diagnosed with COVID-19, or (3) who experiences adverse financial consequences as a result of being quarantined, furloughed, laid off, having work hours reduced, being unable to work due to lack of child care due to COVID-19, closing or reducing hours of a business owned or operated by the individual due to COVID-19, or other factors as determined by the Treasury Secretary.
Furthermore, the provision provides flexibility for loans from certain retirement plans for coronavirus-related relief. The relief applies to loans to a qualified individual made during the 180-day period beginning on the date of the enactment of the legislation for amounts up to $100,000. If the due date under paragraph (B) or (C) of Code Sec. 72(p)(2) for any repayment for the loan occurs during the period beginning on the date of the enactment of the bill and ending on December 31, 2020, the due date is delayed for one year. A qualified individual is defined above for coronavirus-related plan distributions.
Roth Conversions
The new rules regarding charitable contribution limitations discussed in an earlier Hoffman & Associates release may provide an opportunity for offsetting IRA conversions to a Roth IRA with charitable contributions since the limitation of currently deductible charitable contributions has been increased to 100% of Adjusted Gross Income.
For more information regarding the CARES Act filing extensions or retirement plan provisions, please give us a call at 404-255-7400 or info@hoffmanestatelaw.com.
