The Status of RMD’s for 2020

The Status of RMD’s for 2020

There has been a tremendous amount of confusion over what Congress intended to say about taking Required Minimum Distributions (RMD’s) from your IRA for 2020. Let me try to clarify:

The CARES Act enacted by Congress in the wake of COVID19 allows any taxpayer with an RMD due in 2020 from a defined-contribution retirement plan, including a 401(k) or 403(b) plan, or an IRA, to skip those RMDs this year. This includes anyone who turned age 70 1/2 in 2019 and would have had to take the first RMD by April 1, 2020.

What if I have already taken my 2020 RMD?

The IRS has extended the rollover deadline for required minimum distributions (RMDs) taken from IRAs or company plans in 2020. In Notice 2020-51, released on June 23, 2020,  the IRS said that any unwanted 2020 RMDs can be repaid via rollover to an IRA or company plan by August 31, 2020.

What this means is that if you have already taken your RMD for this year before the CARES act was signed, you can put it back.

Normally RMDs cannot be rolled over. However, the CARES Act waived 2020 RMDs (and first-time 2019 RMDs delayed until 2020) from IRAs and defined contribution plans. For this reason, amounts received in 2020 that would have been RMDs are eligible for rollover since they are technically not RMDs.

Notice 2020-51 extends the rollover deadline to August 31, 2020. The extended deadline covers RMDs taken any time in 2020 – including in January 2020. The IRS also says that RMD repayments will not count against the once-per-year rollover rule. This will allow all 2020 monthly RMDs to be repaid. The IRS also carved out an exception to allow non-spouse beneficiaries to repay inherited IRA RMDs.

Notice 2020-51 applies to RMD payments only. Withdrawals of non-RMD funds are still bound by the usual 60-day rollover deadline (or the July 15, 2020 deadline for distributions made after January 31, 2020). In addition, distributions of amounts other than RMDs are still subject to the once-per-year rollover rule.

Let me know if you have any questions or if I can assist you in any other way.

 

Cheers -Keith

916-925-8900

“Invest for need, not for greed!”

Smart Money Newsletter

Written By: Keith Springer

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The Status of RMD’s for 2020

The Status of RMD’s for 2020 There has been a tremendous amount of confusion over what Congress intended to say about taking Required Minimum Distributions (RMD’s) from your IRA for 2020. Let me try to clarify: The CARES Act enacted by Congress in the wake of COVID19 allows any taxpayer with an RMD due in 2020 from a defined-contribution […]

Read the full post

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