The passage of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) has created additional challenges for those managing their organizations’ unclaimed property compliance program when determining dormancy on potentially reportable retirement accounts.
The 800-plus page CARES Act includes a provision for Required Minimum Distribution (RMD) relief for retirees and beneficiaries in 2020. (See Section 2203. Temporary Waiver of Required Minimum Distribution Rules For Certain Retirement Plans and Accounts). This could translate to a one- year delay of dormancy for many account holders who would have been required to take their first RMD in 2020. The CARES Act also impacts beneficiaries of deceased account holders whose accounts were being drawn down under the “5 year rule,” effectively delaying dormancy another year due to the waiver of RMD requirements in 2020.
Coupled with the upward revision in RMD age, from 70.5 to 72, by the 2019 Setting Every Community Up for Retirement Enhancement Act (SECURE Act), the first few months of 2020 have seen quite a bit of movement for retirement accounts legislatively. The Act also has adjusted the RMD Death provision to a “10 year rule” for most non-spouse beneficiaries.