IRA Year-End Reminders

By Eric Eros | Case Planning Qualified Plans

IRA year-end reminders

2021 is right around the corner. The following reminders can help you jumpstart your year-end retirement planning with your clients.

RMDS s were waived in 2020 due to the provisions in the CARES Act

The RMD waiver includes year-of-death RMDs and Inherited IRA accounts. Normal RMD rules will resume in 2021.

Corona-virus-related distributions (CRDs)

IRA owners may take a distribution up to $100,000 to pay for coronavirus-related expenses until December 31, 2020 without being subject to the 10% early withdrawal penalty. A CRD is permitted for those who are diagnosed with COVID-19, have a spouse or dependent who tests positive, or who have experienced financial problems as a result of being quarantined, laid off, working fewer hours, or experiencing a lack of child care options due to the pandemic.

Qualified charitable distributions

  • Any amount given to a qualifying charity will be excluded from income. Only IRA owners who are 70 ½ qualify. The annual limit is $100,000 per person.
  • The IRA custodian must send distribution directly to the charity.

Verify that 72(t) distributions have been made

  • 72 (t) payments are a Series of Substantially Equal Periodic Payments that are taken annually. This method is used to access IRA funds before a client reaches age 59½. The payments must be taken over a 5-year period or until the IRA owner reaches age 59½, whichever is longer. There are three methods for calculating 72(t) distributions: amortization, minimum distribution, and life expectancy. 72(t) payments must be taken by December 31, 2020.

Roth conversions

  • If an IRA owner makes too much income to contribute directly to a Roth IRA, you might consider using the backdoor Roth strategy. The conversion deadline is December 31. Conversions may no longer be reversed. Verify that the Roth conversion makes sense for the client by accurately predicting the tax bill.

Contributions to IRA accounts

  • Contributions can be made up until the IRA owner’s tax filing deadline, not including extensions.
  • Confirm that income does not exceed phase-out limits before suggesting IRA contributions.
  • Verify that rollovers executed in 2020 were done in time.

If you have any questions, contact us in Case Planning – Qualified Plans by email at


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