RMDs Taken in January Can Now Be Rolled Over Until August 31
by Charles Rotblut | June 24, 2020
Charles Rotblut recently spoke at the AAII Investor Conference 360. Video replays of all sessions are available for purchase. Go to www.aaii.com/investorconference for more details.
The IRS published Notice 2020–51 Guidance on Waiver of 2020 Required Minimum Distributions yesterday.
The updated guidance pushed back the deadline for rolling over a required minimum distribution (RMD) taken this year to August 31, 2020. It also made RMDs taken in January eligible to be rolled over. Here’s what the new guidance specifically states:
“Extension of 60-day deadline for rollover of certain distributions. To assist plan participants who have already received distributions in 2020, the Treasury Department and the IRS, pursuant to § 402(c)(3)(B), are extending the 60-day rollover period for any payments described in section III.A and section III.B of this notice so that the deadline for rolling over such a payment will not be before August 31, 2020. For example, if a participant received a single-sum distribution in January 2020, part of which was treated as ineligible for rollover because it was considered an RMD, that participant will have until August 31, 2020, to roll over that part of the distribution. In addition, the Treasury Department and the IRS, pursuant to § 408(d)(3)(I), are extending the 60-day rollover period for IRA distributions in 2020 that would have been an RMD in 2020 but for section 2203 of the CARES Act or section 114 of the SECURE Act, so that the deadline for rolling over such distributions will not be before August 31, 2020.”
We are in the process of reading the full notice and will note any additional changes in the Tax Guide Update.
Discussion
Andrew G from CA posted over 6 years ago:
Andy G.,CA. My RMD IRA from Merrill Edge (ME) was received in January before the CARES Act and IRS ruling giving the option not to take RMD in 2020. When I asked ME if I can return the funds, I was told 'No' as it was already distributed. Am I to interpret this June 23 IRS Ruling to mean that I can return the funds to ME as part of exercising my option not to take RMD in 2020? I plan to contact ME to find out what they say and hope to share their response here. Any opinion from the AAII or the members is welcome. Thanks.
BRIAN R from RI posted over 6 years ago:
I took two partial distributions towards my 2020 RMD. The first was in January and the second was in February. I returned the February amount in April and understand that I can now return the February amount by August 31. I also made several qualified charitable contributions which amounts will not be returned. My wife also took her full RMD in January ,but took more than the required amount because she rounded the required amount to the nearest two hundred dollars. We are not sure if her entire amount, including the additional rounding amount can be returned or if the rounded amount must be treated as taxable income. Brian R.
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