Rollover Relief for Required Minimum Distributions CARES Act Update

New Guidance for Required Minimum Distributions

Earlier this year, when the Government enacted the CARES Act (the Corona Virus Aid, Relief, and Economic Security Act) one of the provisions is the suspension of any required minimum distributions (RMDs) for retirement accounts in 2020.  We summarized the CARES Act in a previous post here.

On June 23, 2020, the IRS issued new guidance on rollovers of unwanted, previously taken, RMDs in 2020.  Most importantly, the 60 day rollover period is now extended to August 31, 2020 regardless of when the 2020 RMD actually came out.  Previously, the extension only applied to RMDs that came out between February 1, 2020 and May 15, 2020.  Before this new guidance, those who took their RMD in January were stuck.  Now those unwanted RMDs can be returned.  The IRS also decided that this can be done in a Non-Spouse IRA.  This is extraordinary because under normal rules the IRS does not allow rollovers of any kind for Non- Spouse IRA’s.

Once Per Year Rollover Rule

Another notable waiver is the once-per-year-rollover rule. Normally, you can only do one 60-day rollover per 365 days (not a calendar year). For those who took monthly distributions under this unwanted RMD extension, they were still only able to return one of those distributions.  With this waiver, now someone who took monthly RMDs earlier this year can now return all of them!

Note that this guidance applies only to RMDs. Withdrawals of non-RMD funds are not covered under this waiver and must still follow the rules in terms of the once-per-year rollovers and the normal 60-day rollover period.

IRS Notice 2020-51

If you would like to read the full IRS Notice and more explanation, you can find it here, IRS Notice 2020-51,  on the IRS website.

If you have any questions about this update and how it may apply to your situation, you can contact us by clicking here or on the contact tab above.