Should You Skip Required Minimum Distributions?



New law lets you forgo distributions in 2020


The stock market boomed in 2019 – the Dow Jones increased 22%; the S&P 500 jumped 28%; NASDAQ skyrocketed, coming in just shy of 35%. By March 23, 2020, the Dow had plummeted 35%; the S&P dropped 31%; NASDAQ was down 24%.

(As of press time, each market has rebounded to a less catastrophic decline.)

The stock market rollercoaster does not bode well for retirement accounts, as required minimum distributions are normally calculated by dividing an account’s December 31 balance by an IRS life expectancy factor. Enormous account balances on December 31, 2019 means large required minimum distributions (RMDs) from retirement accounts for 2020 after the markets crashed.

The IRS recognizes this problem, allowing RMDs to be skipped for 2020. Are there situations, however, where you may want to still take a distribution from your retirement account? Here are some tips for deciding whether you should forgo an RMD or if it might be better to take one.


Why you should skip RMDs


Delaying RMDs means more assets producing money in the future. If you take distributions from retirement accounts during 2020, consider that you’ll be liquidating securities after your portfolio’s value has fallen. If you refrain from distributions during 2020, that will mean more assets will remain and eventually recover when the market does, eventually, rebound.


You’ll cut your tax bill. Skipping an RMD for some may mean fewer taxes you’ll need to pay to Uncle Sam on your 2020 tax return. If minimizing your tax liability is a primary goal for 2020, then forgoing RMDs should be strongly considered.


Why you should consider taking an RMD


Take an RMD if your income will be low in 2020. If 2020 looks to be a year where your income may be lower, consider taking an RMD in 2020 as you’ll pay lower income taxes on your distributions.


You need the money. You may not have a choice of skipping an RMD if you need the retirement funds to pay for monthly living expenses. Consider asking your financial advisor if you can liquidate securities that have held up relatively well during the downturn while leaving alone any securities that have lost significant value.

Making decisions on how much to withdraw from retirement accounts this year is not for the faint of heart. When in doubt, call to create a revised plan that takes our current pandemic environment into consideration.


For more information, Rosillo & Associates can assist you!  Call at (305)477-5671, or visit

Rosillo & Associates is located in 7950 NW 53rd St., Suite 221, Doral FL  33166



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