But for retirees ... and some of them are stuck with high RMD's even though the value of their retirement funds is dropping
I'm still not getting why this is some horrible wealth-killing thing. I've been taking RMD's on an inherited IRA since about 2005, and so far it hasn't killed me.
Yes, once it has been transferred to a regular taxable account, one has to then annually pay taxes on any gains and income that money produces going forward (the horror the horror).
Of course I have to pay taxes on the RMD distribution, but my parents got a tax break decades ago when they contributed to it.
They knew what the deal was when they signed up for the IRA and took the tax deduction and enjoyed decades of not paying taxes on it. Likewise I contributed to IRAs and 401k's for decades knowing what the deal was -- it's a multi-decade tax-deferral deal, not an eternal tax-deferral (and therefore tax-free) deal.
In some years, I've taken RMDs during down markets via selling assets into cash, and then transferring the cash to a regular taxable account, and then buying similar or different assets (as part of an annual portfolio rebalancing process) a couple days later when the transactions have settled, also at down market prices (known as sell low buy low).
Some IRA custodians allow one to take IRA distributions via transfers of shares from the IRA account to the regular taxable account, so there's not the sell-transfer-buy that I described above. Unfortunately, Fidelity, the custodian of my inherited IRA, isn't one of those, based on a test run I did. (One
might be able to do it by phone or written request). Vanguard appears to be one that does allow electronic transfer of shares.
That said, I just read an article that the Senate-passed version of the Cares Act does away with RMDs for 2020, I presume this will make it into the final version. I don't know if one has to "catch up" in some later year though (i.e. it might be deferring the 2020 RMD, not eliminating it).
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As for getting a $2400 check (or whatever is left of it after paying taxes on it) - one can always donate it to charity -- I'm sure their fund-raising is way way down because people are pretty hunkered down financially with the uncertainty about how bad Covid-19 is going to get, and how much further the stock market will plummet (S&P 500 is down 22.3% from February's peak, as of today's, Thursday's close, and there's no more "stimulus" good news on the horizon -- well maybe one more day when the House passes it and the Orange ShitGibbon signs it)
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