Broker Check

How do financial advisors handle retracted RMD notices, complex beneficiary situations, and QCD caveats?

You likely have heard about the basic changes enacted from this law and the impact it will have on individuals and businesses. There are some more in-depth changes that are critical to understand and convey to your clients.


Here are some questions you may have:


  • What if your clients already got an RMD notice from the custodian? What if they made the distribution?

Custodians are required to send notifications to plan participants who are approaching the age where they must take their required minimum distribution. Some clients may have already received this notice because they were approaching 70½  but now they may be able to wait until age 72. The custodian has until April 15th to send a correction letter.


But, what if your client already requested the distribution? Because it’s not an RMD, it can be rolled over as long as it is done with in 60 days (and they haven’t already done a roll over within the last 12 months.) There may be some other options after 60 days where they may be eligible to still complete that roll over option.


We have an additional option for clients with the CARES Act waiver. The CARES Act has waived any required minimum distributions (RMDs) from individual account retirement plans and IRAs for tax year 2020. This waiver means that individuals who have attained age 70½ in 2019 or before, or who have attained age 72 in 2020, are not required to withdraw their RMDs from retirement plans or IRAs in 2020.


  • How could qualified charitable distributions (QCDs) be impacted?

While QCDs from IRA accounts remain available at age 70½ there could be an impact if your client continues to contribute to their IRA with the expanded age change. This means if you turn 70½  in 2020 you are not subject to RMDs but you can make a QCD still. If you make a QCD and also make a tax-deductible contribution, your QCD’s tax deduction will be reduced by the amount of your contribution.


This means if your client makes a $20,000 QCD and also makes a $6,000 2020 tax- deductible contribution to a traditional IRA then only $14,000 of the QCD is tax deductible.


  • What is this new category of beneficiaries?

There is a new category of beneficiary called Eligible Designated Beneficiary created with this law. Understanding the difference is important as you learn the aspects of the SECURE Act.



  • What happens to successor beneficiaries?

You have multiple layers of dates to now keep track of if the account owner dies and then the designated beneficiary dies to properly guide your clients. It may be helpful to think of these categories and dates when sorting through your clients’ particular situations.



CONTACT US today to discuss any questions you may have about how you can integrate these changes without disrupting your practice.


*This information is gathered from sources believed to be correct. Please review the summary and full bill for details: