IRA distribution deferral - Spidell

IRA distribution deferral

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Message Board IRA distribution deferral

  • This topic has 3 replies, 3 voices, and was last updated 1 day ago by Mark Bole.
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    • #287215
      Larry Feldman
      Participant

      If a business person is essentially put out of business by the pandemic and decides it’s time to retire and start drawing pension benefits from his previous employer, would those benefits be available for the three year deferral?

    • #287276
      Diane White
      Participant

      The three – year deferral of pension benefits related to COVID-19 ended on December 31, 2020. However the benefit is still available for Qualified Disaster distributions. Note – COVID-19 is not considered a federally declared disaster.

    • #287277
      Larry Feldman
      Participant

      To Clarify, a business person was essentially put out of business in 2020 by the pandemic and decided it’s time to retire in 2020 and started drawing pension benefits in 2020 from his previous employer, would those benefits  received in 2020 be available for the three year deferral?

    • #287297
      Mark Bole
      Participant

      First , it is not a “3 year deferral”, it is spread ratably over 3 years, meaning one third of the tax is not deferred at all, and the second one third is only deferred for one additional year, the the last third is deferred for another year.

      I’m pretty sure a traditional employer pension (defined benefit plan) is not an IRA or “eligible retirement plan”.  Per the CARES Act, “ELIGIBLE RETIREMENT PLAN.—The  term ‘‘eligible retirement plan’’ has the meaning  given such term by section 402(c)(8)(B) of the Internal Revenue Code of 1986.”  I’ve taken a quick look at the cited code sections and the additional sections they refer to to come to this conclusion.

      In any case, how would they take an “advance” on their pension?  You said he “started drawing pension benefits”, which sounds to me like normal monthly payments.  Therefore there wouldn’t be any “extra” income in the first year to spread over the following years.  The pension income will only be received as each year passes, so there is nothing to defer in terms of tax, it will be taxed year by year as it is paid out.

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