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              Researh Sevice

Required Minimum Distributions from

Retirement Accounts Under the Economic

Stimulus Proposals Related to the

Coronavirus (COVID-19)

March 24, 2020
On March 22, 2020, the Senate released an updated version of the Coronavirus Aid, Relict, and Economic
Security (CARES) Act containing a provision for suspending the penalty for failure to make the required
minimum distribution (RMD) from retirement accounts for 2020. A similar provision was included in a
proposal in the House released on March 23, the Take Responsibility for Workers and Families Act.

What Are Required Minimum Distributions?

Under current law, required minimum distributions must be withdrawn from individual retirement plans
to avoid a 50% penalty on the required minimum distribution (RMD) amount. The required distribution
amount is the minimum amount that must be withdrawn each year after the account holder reaches a
certain age. These requirements apply to traditional IRAs and plans set up by employers, such as 401(k)
plans. (They do not apply to individual Roth IRAs, although they do apply to Roth 401 (k) plans.) Account
holders are not required to take distributions from 401 (K) plans if they are still working.
Distributions must begin in the year when an individual turns 72 (7012 for individuals attaining that age
before January 1, 2020). The increase in the age at which minimum distributions must be made to avoid
the penalty was changed by recent legislation, the Setting Every Community Up for Retirement
Enhancement (SECURE) Act, part of the Further Consolidated Appropriations Act, 2020 (P.L. 116-94).
The penalty is imposed to prevent individuals from keeping funds in their retirement accounts, without
paying taxes, indefinitely. For the first year that distribution requirements apply, distributions can be
delayed until April 1 of the following year.
The amount of the distribution is based on life expectancy and the account balance at the end of the
previous year. For singles and spouses whose ages are less than 10 years apart, the uniform lifetime table
is used to determine the RMD. The share of retirement assets that must will be distributed increases with

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