IRS Grants RMDs Rollover Relief


Novel guidance has been published by the Internal Revenue Service, who extended the rollback period for minimum distributions already taken this year. The guidance encompasses a series of FAQs and offers plans with sample amendments and transition relief.

Signed into law on March 27, 2020, the CARES Act allows taxpayers in defined contribution plans or an IRA with a required RMD in 2020 to pass over RMDs in 2020. This compasses anyone who turned age 70 1/2 in 2019 and would have taken the first RMD by April 1, 2020. If an RMD was already received during this year, a plan participant could roll it over and defer paying taxes, including rolling it back into the plan. However, that must have been done within 60 days of receipt.

Per Notice 2020-51, the IRS prolonged the 60-day rollover period to August 31, 2020. An IRA owner may repay a distribution to the IRA provided their repayment is made by August 31, 2020. The notice also indicates the repayment is not subject to the one rollover per 12-month period limitation and restriction on rollovers for inherited IRAs.

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