Today we have some lovely news stories to share, and then some important facts and a date to remember about the Required Minimum Distribution Income Tax Relief deadline.
First, we wanted to bring your attention to a wonderful program to provide pen pals to nursing home residents. If you like to exchange letters by mail, you could brighten the days of some elderly people who can’t see their loved ones because of the pandemic.
We also loved this story of an eleven-year-old boy whose dancing in the rain video went viral and earned him a scholarship. Anthony Mmesoma Madu lives in Lagos, Nigeria, and studies at Leap of Dance Academy. Actress Viola Davis saw his video on the school’s Instagram page and connected him with the American Ballet Theatre in New York City, where he has been offered a scholarship to train with some of the best ballet dancers in the world.
In the world of finance, we’d like to alert you to some information regarding your RMDs:
Don’t forget the withholding. Thanks to the Coronavirus Aid, Relief, and Economic Security (CARES) Act, those who hold certain retirement accounts can bypass the required minimum distributions for 2020. If you already took the 2020 RMD, you may return the full amount of your RMD to your retirement account. Keep in mind that many retirement account custodians often withhold income tax, which will need to be returned, not just the net amount you receive.
Remember, August 31st. August 31st is the deadline by which you must return your RMD. But considering the widespread disruption caused by COVID-19, it may be wise to begin this process sooner rather than later. After all, with industries shuttering doors or modifying their hours of operation, it may be difficult to contact the various institutions necessary. If you’re unsure where to begin, you can always reach out to us for guidance.
Avoid the 6%. As many retirement account holders know, accidental excess contributions result in a 6% tax. Every year, the excess remains in the account. Typically, this is a non-issue for those working with a financial professional. But considering the flurry of changes to the tax code this year, it may be worth checking with your IRA custodian to make sure they have tagged your transaction as a “return of funds.”
It pays to be sure. These are just some of the most important factors to keep in mind, and the longer you wait, the higher the potential for delay or mishap. We are here for you to make sure your RMDs are returned correctly.
Advisory Services offered through Obsidian Personal Planning Solutions, LLC. Securities offered through Triad Advisors, member FINRA/SIPC. Obsidian Personal Planning Solutions,LLC, and Obsidian Personal Planning Solutions, Inc, are not affiliated with Triad Advisors.