On March 27, 2020 the CARES Act became law in response to the COVID-19 pandemic. This new law included a provision to waive Required Minimum Distributions (RMDs) for 2020. In other words, the act allows individuals with an RMD due in 2020 to skip them this year. However, many retirement account owners had already taken their required distributions prior to enactment of the new law.
To assist these individuals who had already taken RMDs in 2020, lawmakers extended the 60-day rollover period to August 31, 2020. This means that if you took an RMD any time after Dec. 31, 2019, you can put it back into a retirement account before the deadline of August 31, 2020 and it will be treated as a rollover. In addition, this rollover will not be counted as the one-time-in-12-months rollover.
It's important to mention that this relief only applies to distributions taken as RMDs. Here are other key takeaways from the Notice:
- The RMD amount is not an eligible rollover distribution for withholding purposes, so mandatory 20% withholding does not apply.
- A 2020 RMD amount that is distributed is subject to voluntary withholding, unless directly rolled over.
- Distributions from a plan may be rolled back into the same plan, provided the plan permits rollovers
- The 2020 RMD waiver does not alter the participant’s required beginning date.
- The extended rollover period is not available to non-spousal beneficiaries.
- The RMD waiver does not apply to defined benefit plans.
If you have questions on how to go about putting the funds back, please give us a call. We are always happy to assist our clients.
Useful links:
IRS Publication
IRS Newsroom
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