The CARES Act enabled 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. This waiver does not apply to defined-benefit plans, such as pensions.
Initially, the IRS permitted a 60-day rollover period for any RMDs already taken this year. This 60-day period has been extended to August 31, 2020, to allow taxpayers additional time to take advantage of this opportunity.
In addition to the rollover opportunity, an IRA owner or beneficiary who has already received an RMD in 2020 can repay the distribution to the IRA by August 31, 2020. The notice provides that this repayment is not subject to the one rollover per 12-month period limitation and the restriction on rollovers for inherited IRAs.
Under Notice 2020-51, the repayment of an IRA distribution by August 31, 2020 is a new method presented by the IRS for anyone to unwind the receipt of an RMD. This relief, however, only applies to IRAs and not 401(k) and 403(b) plans. Under this repayment option the IRA owner or beneficiary simply repays the amount to the distributing IRA.
Importantly, Notice 2020-51 extends the rollover date of all other 2020 RMDs to August 31, 2020.
If you have any questions or need guidance on either repaying or rolling-over a 2020 RMD, please contact us at RGV & Company.
2020 RVG & Company