June 26, 2020
On June 23, 2020, the Internal Revenue Service released Notice 2020-51 that provides relief to taxpayers who had already taken their required minimum distributions (RMD) prior to the CARES Act that suspended the requirement for 2020.
The CARES Act waived RMDs from defined contribution retirement plans, including a 401(k) plan, 403(b) plan, or an IRA. This relief is also for taxpayers who turned 70½ in 2019 and were required to take their first RMD by April 1, 2020. However, the waiver does not apply to required distributions from defined benefit plans.
Taxpayers now have the opportunity to roll their RMDs back into a retirement account. Typically, taxpayers only have a 60-day window to roll over funds. This rollover period has been extended to August 31, 2020.
In addition to the rollover, taxpayers have the opportunity to repay distributions by August 31st. For example, if a taxpayer took out a lump sum distribution in January, the IRA owner can now repay the distribution to the IRA by August 31st. The repayment is not subject to the one rollover per 12-month period limitation.
We will continue to closely monitor any new developments and keep you informed. If you have any questions, please contact your MichaelSilver tax professionals at 847.982.0333.