Key Takeaways:

  • Provisions of the CARES Act allowed select suspension of required minimum distributions (RMDs) for 2020, but many individuals had already taken their RMDs before the act went into effect
  • The IRS provided additional relief in April, extending the deadline for rollovers of unwanted RMDs to July 15th for distributions taken on or before February 1st
  • On June 23rd, the IRS further extended the deadline to August 31st and included individuals who took distributions beginning January 1, 2020

The August 31st rollover deadline also extends to beneficiaries that took unwanted RMDs from inherited accounts in 2020, which was prohibited under previous legislation\

The Coronavirus Aid, Relief and Economic Security (CARES) Act, signed into law on March 27, 2020, provided over $2 trillion in economic assistance to mitigate the fiscal damage caused by COVID-19 and help stabilize the U.S. economy. One of its provisions allows individuals to suspend their RMDs from qualified accounts in 2020. However, many people had already taken theirs before the act was passed, so in April, the IRS extended the deadline for rolling over unwanted RMDs to July 15, 2020 for distributions taken on or before February 1, 2020.

Additional relief provided by IRS

On June 23rd the IRS released Notice 2020-51, Guidance on Waiver of 2020 Required Minimum Distributions, allowing anyone who took an unwanted distribution beginning January 1, 2020 (including beneficiaries) to roll it over by August 31, 2020. In addition, rollovers taken in 2020 will not be counted toward the one-per-year rollover rule.

What this means for you

RMDs typically cannot be rolled over. However, if you took an RMD earlier this year, which you do not need for living expenses, you have until the August 31st deadline to roll it back into a qualified retirement account and continue to benefit from tax-deferred growth.

Please feel free to contact us with any questions you may have.