TAX LEARNING CENTER

Your Guide To Tax Season and Tax Law Updates.

TAX ALERT | Additional RMD Relief Granted under IRS Notice 2020-51

Under the Coronavirus Aid, Relief and Economic Security (CARES) Act of 2020, required minimum distributions (RMDs) for IRAs and retirement plans were suspended for tax year 2020.  The “60-day rollover” provisions could be utilized for most RMDs already taken early in 2020, but several categories of RMDs were not eligible for rollover, including RMDs from inherited IRAs, Qualified Charitable Distributions (QCDs) made to charity, and RMDs taken early in the year which fell outside of the 60-day rollover window.

The IRS has recently issued IRS Notice 2020-51 granting additional relief.  The most significant relief provisions are as follows:

  • The 60-day rollover deadline has been extended through August 31, 2020 to allow all eligible RMDs to be rolled over, including those that fell outside of the 60-day rollover window;
  • RMDs for inherited IRAs are now allowed to be rolled over; and
  • The “once-per-12-months” rule has been relaxed to allow multiple RMD distributions to be rolled over (i.e. monthly distributions).

Please note that qualified charitable distributions (QCDs) remain ineligible for rollover.  For more information on coronavirus-related relief provisions, please visit the IRS website.

IMPORTANT TAX FILING DATES | Keeping You Prepared and On Time

Tax Filing Deadline | Thursday, April 15, 2021

2021 RETIREMENT PLAN LIMITS | As Set by the Internal Revenue Service

For the 2021 tax year, the following are limits set by the IRS for contributions to your retirement plan(s).

The contribution limit for employees who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan is remaining at $19,500 for the 2021 tax year.

The limit on annual contributions to an IRA remains unchanged for the 2021 tax year at $6,000. The additional catch-up contribution limit for individuals aged 50 and over is not subject to an annual cost-of-living adjustment and remains at $1,000.

Under the SECURE Act passed in December 2019, significant changes were made to IRA and retirement plan rules.  A few of the most impactful changes include:

  • Repeal of the maximum age for making traditional IRA contributions at age 70½.
  • Increase in the Required Minimum Distribution (RMD) beginning age from age 70½ to age 72 for retirement plans and IRAs.
  • Partial elimination of the popular “stretch IRA” strategy.

The IRS has also recently made updates to the life expectancy tables for calculating required minimum distributions. These changes take effect on January 1, 2022.

(Source: IRS.gov External Website Arrow)

2021 Tax Season Checklist

To prepare for the tax filing season, there are several things you should take into consideration.
Review our 2020 tax filing season checklist to plan accordingly.

WHEN SHOULD I EXPECT MY TAX FORMS? | What You Need to Know

Because Central Trust Company typically awaits receipt of your final tax information, we want you to be aware of when you will receive your yearly tax documents.

RECENT TAX INSIGHTS | Making Sense of Tax Season

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