Coronavirus Aid, Relief, and Economic Security Act

Coronavirus Aid, Relief, and Economic Security Act

May 01, 2020

The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) is a bill that was passed to help Americans in many ways due to the downturn in the economy set off by the Coronavirus pandemic. This bill is over 1,000 pages of text and details funding, loans, and tax relief for individuals and businesses. The act also includes changes that will impact retirees’ retirement plan contributions, and distributions for 2020.

Members with traditional IRA accounts held in Western Fraternal Life’s annuity products should be aware of changes to contribution deadlines and required minimum distributions.

1. IRA Contributions

What changed: The tax filing deadline has been extended to July 15, 2020. Therefore, individuals are able to make contributions into their IRA as a deductible contribution for 2019 up until July 15, 2020, if they have not already filed their 2019 tax return.

2. Required Minimum Distributions

What changed: The biggest change to retirement-related accounts is the suspension of all required minimum distributions from retirement accounts for 2020. This includes distributions from IRA, 401(k), 403(b) and 457(b) accounts. This means that you can skip the 2020 required distribution and then resume distributions in 2021.

Many retirees have qualified funds in variable or indexed accounts that may have much lower account balances now than they did at the end of 2019 when the RMD amounts would have been calculated. This suspension allows for you to leave the funds in your account for another year and let them recover from the market downturn due to the volatility and uncertainty in the economy and stock market. There is, however, no guarantee on the performance of the market or that your balance will be the same or higher at the end of 2020. You do not have to worry about this volatility with your Western fixed annuities.

3. Distributions From Retirement Accounts

What Changed: You may be eligible to withdraw funds from your retirement plan or IRA without the 10% early withdrawal penalty. Withdrawals can be made by those affected by the coronavirus and meet the definition set by the CARES Act. The distribution is still taxable but can be reported over a three year period. Funds can also be rolled back into the retirement account over the three year period to avoid taxation.

Loans from employer sponsored retirement plans have also been increased to a maximum of $100,000.

For more details on the CARES Act visit

If you want to suspend your 2020 RMD, contact your Western Fraternal Life agent or the Home Office. You should contact your tax adviser regarding the taxation of distributions.

Category: Financial

Kevin Simpson


CLU, CRPC, CLTC Sales and Marketing Manager

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Call 877-935-2467 to speak with a Western Fraternal Life Representative.