Deadline Approaching to Roll Back Required Minimum Distributions

The CARES Act included a 60-day rollover period for any RMDs already taken in 2020.  The CARES Act was introduced on March 27, 2020, leaving those who took their RMDs in January unable to roll them back. The IRS’s recent announcement levels the playing field and now pertains to anyone who took an RMD in 2020. Here are more details:

 

  • Taxpayers who were required to take an RMD in 2020 from a defined-contribution retirement plan, including a 401(k) or 403(b) plan, or an IRA (including inherited IRAs) are allowed to skip those distributions this year.
  • Anyone who turned age 70 1/2 in 2019 and would have had to take the first RMD by April 1, 2020, are allowed to skip as well.
  • Those with defined-benefit plans are NOT able to skip their distributions.
  • Taxpayers have until August 31, 2020 to roll their distributions back into their account, extended from the original date of July 15, 2020.
  • Repayment is treated as a tax-free rollover but is not subject to the one rollover per year rule.

 

If you have any questions on whether you should keep your RMD this year or roll it back into you account, your AHP or AHP Financial Services professional would be happy to discuss this with you.

 

© 2020

Any accounting, business, or tax advice contained in this communication, including attachments and links to outside sources, is not intended as a thorough analysis of specific issues, nor a substitute for a formal opinion, nor was it written to be used to avoid tax related penalties.

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