Yesterday the Internal Revenue Service announced that anyone who already took a required minimum distribution (RMD) in 2020 from certain retirement accounts may roll those funds back into a retirement account if they act by August 31, 2020.
Before Tuesday's IRS notice people could only roll back into a retirement plan an RMD that was taken between February 1, 2020 and May 16, 2020.
In addition, an IRA owner or beneficiary who has already received a distribution from an IRA of an amount that would have been an RMD in 2020 can repay the distribution to the IRA by August 31, 2020. The IRS states that this repayment is not subject to the one rollover per 12-month period limitation and the restriction on rollovers for inherited IRAs.
The CARES Act signed into law in March 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 in 2020. 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.)
This week's IRS notice gives flexibility in dealing with retirement accounts for many clients. If you have any questions or concerns, please reach out to your RINA accountant, or email our response team to discuss the help you need.
In addition, if you want to read the IRS's official statement, the notice is available on their website.