Beginning January 1, 2020, the SECURE Act changed several rules for IRAs and qualified retirement plans to help individuals save more for retirement. Two of those changes for IRAs not only affect what happens when IRA owners reach age 70½ but result in some confusing interactions with other rules. Recently, the IRS released Notice 2020-68 to help IRA owners understand and apply these changes. Here are some of the clarifications.

 #1 – No More Age 70½ Limit on Traditional IRA Contributions – For Some?

The SECURE Act eliminated the rule that prohibited Traditional IRA owners from making IRA contributions once they reached age 70½. Beginning for tax year 2020, so long as you have earned income, you may contribute to your Traditional IRAs after age 70½.

Notice 2020-68, however, states financial organizations can choose whether to accept contributions from IRA owners age 70½ or older. It is possible some IRA trustees and custodians may choose not to accept contributions from IRA owners after age 70½. If a financial organization chooses to accept these contributions, the IRA plan agreement and disclosure statement must be amended.

#2 – Increase in RMD Starting Age from 70½ to 72 – Unless You Already Started

Another big change for IRAs is the increase in the RMD starting age from 70½ to 72. This means that an IRA owner does not have to take their first RMD until April 1 following the year containing their 72nd birthday. However, if you reached 70½ by December 31, 2019 (i.e., your 70th birthday was before July 1, 2019), you are covered by the rules that require your RMDs to begin at age 70½ and must continue taking one every year after that.

CAVEAT for 2020: Remember that you don’t have to take any RMD in or for 2020 no matter your age or starting date. The CARES Act waives all RMDs for 2020, including 2019 RMDs not yet taken in 2019, and 2020 RMDs due by April 1, 2021.

#3 – RMDs Won’t Affect Your Option to Contribute Post-age 70½

Because you may now make contributions after age 70½ but must begin RMDs at age 72 (70½ in some cases), it’s possible that you will be making a tax-deductible contribution to a Traditional IRA in the same year that you are required to take a taxable distribution from the same IRA as an RMD. These are separate transactions, and both are permitted in the same tax year.

#4 – QCDs Are Affected by Post-age 70½ Contributions

The rules for Qualified Charitable Distributions (QCDs) haven’t changed. Beginning at age 70½, you may make a tax-free charitable contribution of up to $100,000 directly from your Traditional IRA to a qualifying charity. The QCD can satisfy your RMD (tax-free) for the year. However, now that IRA owners can contribute to an IRA after age 70½, Congress wanted to make sure IRA owners are not “double dipping” by taking deductions for contributions and also avoiding tax on distributions made as a QCD. So, you if you make tax-deductible contributions after age 70 ½, you will have to subtract that amount from the amount you can exclude from your taxable income as a QCD. The following example illustrating this rule is based on the IRS guidance found in Notice 2020-68.

The IRA owner is age 71 in 2020. She makes the following series of IRA transactions from 2020–2022.


Deductible IRA Contributions











For 2021, She must reduce the amount of QCD she can exclude from taxable income by her aggregate post-age 70½ contributions: $6,000 QCD – $10,000 post-age 70½ contributions = ($4,000). She cannot exclude any of her 2021 QCD from taxable income.

For 2022, the IRA owner has $4,000 of post-age 70½ contributions left to offset any QCDs she tries to exclude from income. Since her 2022 QCD is $6,500, she may exclude $2,500 of her QCD from her taxable income in 2022: $6,500 – $4,000 = $2,500.

As long as she does not make any more deductible IRA contributions, any future QCDs she makes should be tax-free.  

For More Information

Consult your tax advisor if you’re age 70½ or older and want to make tax-deductible contributions or QCDs to make sure you’re making the most of the tax benefits available to you. Be sure to also check with your IRA custodian regarding any special procedures.

Tags: distribution, required minimum distribution, RMD