Wealth Planning

Updated: Changes to U.S. tax filings and retirement accounts

Your quick guide to what’s different in 2020—and what’s stayed the same.


Key Takeaways:

  • July 15 is the new deadline for U.S. taxpayers to file their 2019 federal income and gift tax returns and paying their federal income and gift tax bills.
  • IRA contributions for 2019 can also be made by July 15. 
  • Required minimum distributions from IRAs and certain qualified retirement plans are waived for 2020.
  • This information is current as of June 24, 2020. This article will be updated as new information is released. Be sure to speak with your tax advisors before taking any action.

Tax-Filing Changes

Relief for U.S. taxpayers: the IRS will allow individuals to defer filing 2019 federal income tax returns, paying 2019 federal income tax bills, and making April and June 2020 estimated quarterly tax payments until July 15 without interest or penalties. This deferral also applies to trusts, estates, partnerships, and corporations.

The IRS will also allow individuals to defer filing 2019 federal gift tax returns and paying federal gift and generation-skipping transfer tax bills until July 15 without interest or penalties.  This benefits individuals who made taxable gifts, including frontloaded gifts to 529 plans, in 2019.

The deadline for contributions to individual retirement accounts (IRAs) has also changed: you have until July 15 to make contributions for 2019.

It’s also important to note that state and municipal taxes aren’t affected by this IRS announcement. While some locations (including New York and California) are allowing deferred filings and payments to some extent, you’ll want to check with your state or local government or your tax advisor.

Retirement Account Changes

Relief for retirement account owners and beneficiaries:  The new rules give retirement account owners and beneficiaries relief from required minimum distributions (RMDs) and some of the taxes and penalties typically due on withdrawals. Owners and beneficiaries of IRAs and certain qualified retirement plans will not need to take RMDs in 2020.  


If you had already taken all or a part of your 2020 RMD before this change went into effect, the IRS is giving taxpayers until August 31, 2020 to recontribute RMDs to their IRAs and qualified retirement plans. Remember that if you had income taxes withheld from the RMD when you took it, you must recontribute the full amount of the withholding if you want to avoid triggering tax.

Younger account owners are provided some relief when taking distributions early, before they turn 59 ½.  Typically, these early withdrawals would be subject to penalties.  For withdrawals taken in 2020, however, so long as those withdrawals are “coronavirus-related distributions” and do not exceed $100,000, no federal early withdrawal penalties will be assessed.  And, for any account owner (including a younger account owner), if those “coronavirus-related distributions” are repaid within 3 years, there will be no federal income tax due on them.  But, if owners decide not to repay these withdrawals, they will have to pay federal income tax on them during the 3-year period.

The new rules allow for more generous loans from 401(k)s made on or before September 23, 2020 – these loans can be for up to $100,000, up from the usual cap of $50,000.

For account beneficiaries who are required to withdraw inherited accounts over a period of years, they may be able to do so without counting 2020 in that withdrawal period, effectively extending the withdrawal period for an additional year.

Because everyone is in a different situation, be sure to check in with your tax advisor as you consider what’s best for you.

Speak with your J.P. Morgan team. In partnership with you and your tax advisors, our teams can help you identify the right solution for your long-term goals.

 

 

 

 

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