June 24, 2020
We hope you are all safe and practicing proper precautions.
As we have previously discussed, the CARES Act eliminated required minimum distributions (RMD’s) for 2020 in light of the coronavirus pandemic. As you will recall, you are not required to take your RMD for 2020, and for those who took their RMD, we were allowed to “pay it back.” By not taking the distribution, we were able to save taxes in many instances.
However, for those who took RMDs early in the year (in January), many did not qualify for what is called a 60-day rollover, which allowed you to essentially pay the RMD back into the retirement account.
This created a situation where you took an RMD but had no way to return the funds, even though RMDs were no longer required. Especially for those that took distributions in January, there were limited options until this week.
The IRS provided guidance this week with some big news:
The 60-day rollover period for 2020 RMDs has been extended to August 31, 2020, including any RMDs taken in January. Therefore, those of you who took RMDs in January will now be able to return those monies to the account by August 31 and you may be able to save taxes as a result.
We will be reaching out soon with more information on how to treat those distributions. Thank you for your patience as we await clarification on the situation. But, if you have any specific questions, feel free to reach out on how this might impact your current situation.