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You are here: Home / Featured Information / “What’s all this I hear about Armdys? Is it a new burger place?”

November 19, 2019 Leave a Comment

“What’s all this I hear about Armdys? Is it a new burger place?”

“No, it means ‘Raisin Made Dates.’”

“Well, that doesn’t make any sense – isn’t a raisin already a date?”

“Wow.”

Ever been part of a conversation like that and wanted to burst in with what’s really going on?

Not Armdys, not Raisin Made Dates (I mean really) – RMDs.  Required Minimum Distributions.

For those of you lucky to have a retirement account AND be 70 ½ years old, here’s the over/under on RMDs:

  • RMDs must typically be taken by December 31 each year; except for the year in which you turn 70 ½.
  • When you turn 70 ½, you have until April 1 of the next year.
  • The effective deadline for 2019 RMD first-timers is coming up fast. Tuesday, March 31 is the deadline.

To clarify: if you turned 70 ½ in 2019, you must take your Required Minimum Distribution (RMD) by March 31st, 2020.

If your financial advisor has not contacted you via email or regular mail, we recommend you reach out to him/her to ensure your proper RMD has been calculated.

Did you receive a form 5498? Look at Box 11 to see if an RMD is due.

Fun Facts:

  • The RMD rules apply to traditional IRAs, most 401(k)s and other qualified retirement plans. The rules don’t apply to Roths, unless:
    • If you are the beneficiary who inherits a Roth IRAs, you must take an RMD
  • RMD amounts are based on an IRS formula driven by the account owner’s life expectancy; the RMD is calculated by dividing the year-end account total by the number of years you’re expected to live.
  • If you have multiple accounts, you need to calculate the RMD for each IRA separately. But you can aggregate the amounts owed and make the withdrawals from whatever accounts you like.
  • If you have other qualified plans – such as 401(k)s – those must be calculated and paid out separately from those accounts.
  • If you have an inherited (or beneficiary) account, that RMD must be satisfied separately, too.
  • Although most investors take the smallest RMD possible, there’s no limit on how much you can withdraw without penalty after you reach age 59 ½.
  • RMDs can be taken in a single lump sum, or through a series of timed distributions throughout the year.

And finally, pay attention to this one because this is a most excellent planning opportunity:

  • If you are 70 ½ or older you can satisfy your RMD (required minimum distribution) from IRA retirement accounts by making a qualified charitable distribution (a QCD) directly to the charity from your IRA. (This has the potential to affect how much Social Security is taxed and how much you will pay for Medicare B and D) and presents the opportunity to reduce Federal and State tax liabilities.

Whoa.

We are happy to help with any planning or questions you may have.  We cannot help with trying to explain that raisins are not dates, though.  You’re on your own.

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Filed Under: Featured Information, News, Social Security and Retirement Planning Tagged With: charitable distribution, distribution, planning, QCD, RMD

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COVID-19 Related News and Updates

Check here for the most recent updates we have gathered regarding the impact of COVID-19 and taxes, personal finance and planning.

We are also going to be providing – and updating – links to get you the most up-to-date information on changes.

 

Regarding the PPP (Paycheck Protection Program), please note: 

Because we are not “authorized agents” for purposes of completing loan applications, we are not able to complete the actual loan applications for our clients. At this point, there is limited and unclear guidance available for the loan process. We will do our best to provide information and/or documentation requested by the lenders that we have access to as your bookkeepers/accountants and/or tax preparers, but we are unable to assist with the actual loan application or loan amount requests. There are severe penalties for misrepresentation. These documents must be signed under penalty of perjury and we take that responsibility very seriously.

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Get My Payment (Economic Impact Payment) status checking tool:  https://www.irs.gov/coronavirus/get-my-payment

Senator Chris Murphy’s Page:  https://www.murphy.senate.gov/coronavirus

From the IRS, those who would have had to take an RMD have been given relief for 2020.  Official policy can be found here:  https://www.irs.gov/pub/irs-drop/n-20-06.pdf

For those with student loans, check out this site for FAQs on relief in 2020:  https://studentaid.gov/announcements-events/coronavirus and https://patch.com/connecticut/across-ct/ct-coronavirus-payment-relief-student-loan-borrowers-lamont

SBA Loan Info:  https://www.sba.gov/page/coronavirus-covid-19-small-business-guidance-loan-resources

CT Department of Labor

CT DMV is extending license renewals:  https://portal.ct.gov/DMV/Easy-Answers/Easy-Answers-Webpages/How-to-Renew-Your-Drivers-License

IRS FAQs on the stimulus payments:  https://www.irs.gov/newsroom/economic-impact-payments-what-you-need-to-know

Employee Retention Credit:  https://www.irs.gov/newsroom/faqs-employee-retention-credit-under-the-cares-act

CT Program for minority and female-owned businesses (It’s a 0% line of credit with forgiveness if used for certain types of expenses within 3 months):  https://www.hedcoinc.com/state-of-ct-hedco-decd-covid-19

The IRS has suspended their collections process during COVID-19.  Click here to read the updates:  https://www.taxprotoday.com/news/irs-hits-the-brakes-on-collections-in-response-to-the-coronavirus

 

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2020 Year-End Letter

We envision a somewhat different tax season here at the Madison office of National Tax and Finance, formerly MJW EA & Co LLC, as 2021 is rapidly approaching. Due to COVID19, as well as advanced technology, we are encouraging our clients to use our Canopy portal to deliver their tax, financial and personal documents. It […]

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