The Internal Revenue Service just announced that anyone who already took a required minimum distribution (RMD) in 2020 from certain retirement accounts now has until August 31, 2020 to roll those funds back into a retirement account. This was announced via Notice 2020-51 on June 23 and it expands on the original announcement in the CARES Act that was passed in late March.
The standard repayment window is 60 days. With this extension to the end of August, taxpayers now have a significant amount of additional time to make this decision. In addition, while there is ordinarily a one rollover per 12-month period limitation, as well as restrictions on rollovers for inherited IRAs, repayment of a 2020 RMD has been excluded from these rules.
The CARES Act allows taxpayers to skip their 2020 RMDs from a defined contribution retirement plan. This includes RMDs from a 401(a), 401(k), 403(b), or 457(b) plan, as well as an IRA. Those who turned age 70 1/2 in 2019 and would have had to take their first RMD by April 1, 2020 are permitted to skip or return their RMD as well. This waiver does not apply to defined benefit plans. Please note that Qualified Charitable Distributions (QCDs) will not be permitted in 2020 if the RMD is forgone.
What the CARES Act did not initially do was make this waiver retroactive for those who had already taken their 2020 RMD more than 60 days prior to the law's passing. This has now been rectified, at least until August 31.
The notice
here provides two sample amendments that employers may adopt to give plan participants and beneficiaries whose RMDs are waived a choice as to whether or not to receive the waived RMD.
We believe this reflects the most current information as of June 25, 2020. If you have questions about your personal situation, please feel free to reach out at any time! We will be sure to send out additional guidance or clarification, as it is released.