These retirement savers come out ahead in the coronavirus bill

For people who turned 70½ last year and were required to take a withdrawal from their individual retirement account or 401(k) plan by April 1, procrastination pays.

That’s because the coronavirus relief bill — which passed the House on Friday and now goes to President Donald Trump for signing — allows retirees to waive their required minimum distributions from retirement accounts for this year.

It’s good news for retirees who have a 2020 distribution, and also for people who chose to wait until April 1 to take their first 2019 RMD.

This also means if you played your cards right and waited until the last minute, you’re waiving both the 2019 and 2020 distributions.

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“The people who didn’t listen to their financial advisors came out ahead,” said Ed Slott, CPA and founder of Ed Slott & Co. in Rockville Centre, New York.

Historically, savers who are aged 70½ have  to take mandatory withdrawals from their retirement accounts every year. The distributions are required from each 401(k) account you hold, as well as any traditional IRAs you have.

Roth IRAs are exempt from RMDs, but Roth 401(k) investors must take the mandated withdrawals.

Starting in 2020, the Secure Act boosted the RMD age to 72.

If it’s your first time taking this distribution, you generally have until April 1 of the following year to do so. But all subsequent RMDs must be taken by year-end.

The added sweetener for waiving the 2020 RMD is that those withdrawals would have been based on account values as of the end of 2019 – back when the markets were at their heights.

“You would’ve been stuck taking the RMD and paying taxes on value that no longer exists,” said Slott. “So for that reason, the waiver is good.”