IRAs

The following CARES Act provisions affect your IRA with Founders

The Coronavirus Aid, Relief and Economic Security (CARES) Act, states individuals, including beneficiaries, are not required to take required minimum distributions (RMDs) from Traditional or Inherited IRAs in 2020.

If you want to receive your scheduled RMD payment in 2020 or have no scheduled payments, no action is required. If you are receiving scheduled RMD payments and would like to waive your 2020 RMD, please speak with a Financial Services Representative for assistance.

Additionally, you are able to take penalty-free coronavirus-related distributions (CRDs) of up to $100,000 in aggregate from IRAs and repay the distributions within three years.

NOTE:  If you have already received a payment in 2020, you may wish to consult with your tax advisor to determine your options.  A summary of potential options for returning your RMD is provided below.

If you are an IRA holder who has already withdrawn an RMD in 2020 (including a 2019 RMD that was due by April 1, 2020), or you are a spouse or non-spouse beneficiary of a deceased IRA holder and have already withdrawn a 2020 RMD, you may be able to return all or any portion of the RMD amount to an IRA, as indicated below. 

• An IRA holder or spouse beneficiary who has not performed an IRA-to-IRA rollover in the 12 months immediately preceding the date the RMD was withdrawn in 2020, may roll over all or any portion of the RMD to an IRA by August 31, 2020. This rollover may be completed even if the normal 60-day time limit for rollovers has passed.
• If you are an IRA holder or spouse beneficiary who has already performed an IRA-to-IRA rollover in the 12 months immediately preceding the date the RMD was taken in 2020, or you are a non-spouse beneficiary who has withdrawn a 2020 RMD, you may repay all or any portion of the RMD withdrawn in 2020 to the distributing IRA by August 31, 2020.

If you have additional questions, contact a Founders Financial Services Representative. Click here for a list of representatives and their phone numbers.

The following SECURE Act provisions affect your IRAs

• Delayed age for beginning RMDs
  • The age when required distributions (RMDs) from Traditional IRAs must generally begin has been increased from age 70½ to 72. This is effective for distributions required in 2020 and later years, for those who reach age 70½ in 2020 or a later year.
• More flexibility for IRA contributions
  • Taxpayers with earned income can make Traditional IRA contributions at any age, not just for years prior to reaching age 70½ , as under current law. This is effective for 2020 and later taxable years.
  • Certain stipend, fellowship, and similar payments to graduate and postdoctoral students will be treated as earned income for IRA contribution purposes. This is effective for 2020 and later taxable years.
• More rapid payouts to non-spouse (and other) beneficiaries
  • Most non-spouse beneficiaries of IRAs will generally be required to distribute inherited amounts within 10 years. This is effective for IRA owner deaths in 2020 or later years.
    • Exceptions include those who, at the time of the account owner’s death, are:
      • Disabled individuals.
      • Certain chronically ill individuals.
      • Beneficiaries whose age is within 10 years of the decedent’s age.
      • Minors (they would begin a 10-year payout period upon reaching the age of majority).
      • Recipients of certain annuitized payments begun before enactment of the SECURE Act.
• Birth/adoption excise tax exception
  • The birth of a child or adoption of a child (or individual who is incapable of self-support) qualifies both as a plan distribution event and as an amount that is exempt from the 10 percent early distribution penalty tax (if applicable) for distributions of up to $5,000 in aggregate from IRAs. These amounts may be repaid. This is effective for distributions in 2020 and later years.

Additional Features

Terms and Conditions

1 Allowed a one-time dividend rate upgrade request during the original term. At the time of request, the dividend rate will be increased to the dividend rate offered at that time for the same product and term and will be fixed until the original certificate maturity date.
2 To qualify, you must have a checking account opened at least six (6) months with a minimum of ten (10) member-initiated transactions within the past sixty (60) days and must already have one of the following FFCU products: a credit card, loan, certificate or IRA.
3 Seek tax advice.

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