IRS Permits RMD Rollovers Until August 31, 2020

by D. Robert Morris

The Coronavirus Aid, Relief and Economic Security Act, known as the CARES Act, permits any taxpayer with a Required Minimum Distribution (RMD) due in 2020 from a defined-contribution retirement plan, including a 401(k) or 403(b) plan, or an IRA, to skip the taxpayer’s RMD this year.  This includes anyone who turned age 70 1/2 in 2019 and would have had to take the first RMD by April 1, 2020.

Those who had taken an RMD prior to passage of the CARES Act on March 27, 2020, or who mistakenly took an RMD thereafter, were permitted to rollover those funds to a retirement account (including the IRA or other retirement account from which it was distributed) within 60 days of the date of distribution, provided the retirement account may accept the rollover.  However, those who received an RMD prior to January 29, 2020 could not make such a rollover.  On June 26, 2020, in IRS Notice 2020-51, the IRS announced that the rollover of RMDs would be permitted until August 31, 2020, irrespective of the date during 2020 when such distributions were taken.

This IRS Notice also provides that repayment is subject neither to the one rollover per 12-month period limitation nor the restriction on rollovers for inherited IRAs.

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