The IRS has provided guidance relating to the waiver in 2020 of RMDs from certain retirement plans and IRAs due to the amendment of IRC Sec. 401(a)(9) by Sec. 2203 of the Coronavirus Aid, Relief, and Economic Security (CARES) Act.
Notice 2020-51 provides rollover relief (including an extension of the 60-day rollover period to 8/31/20) with respect to waived RMDs from IRAs; defined contribution plans, such as 401(k)s, 403(b)s, and 457(b) plans for government employers; and the Federal Thrift Savings Plan.
RMDs taken in January through June qualify for the rollover extension until August 31, 2020. In addition, the one-rollover-every-12-months requirement for IRA owners who took RMD monthly installments in 2020 has been waived, with owners of inherited IRAs and other inherited plans also qualifying for the waiver.
Of particular interest is the extension of the 60-day deadline for rollover of certain distributions and the permitted repayments of RMDs previously distribute from an IRA. Below are the specific details of each:
Extension of 60-day deadline for rollover of certain distributions.
To assist plan participants who have already received distributions in 2020, the Treasury Department and the IRS, pursuant to § 402(c)(3)(B), are extending the 60-day rollover period for any payments described in the notice so that the deadline for rolling over such a payment will not be before August 31, 2020. For example, if a participant received a single-sum distribution in January 2020, part of which was treated as ineligible for rollover because it was considered an RMD, that participant will have until August 31, 2020, to roll over that part of the distribution. In addition, the Treasury Department and the IRS, pursuant to § 408(d)(3)(I), are extending the 60-day rollover period for IRA distributions in 2020 that would have been an RMD in 2020 but for section 2203 of the CARES Act or section 114 of the SECURE Act, so that the deadline for rolling over such distributions will not be before August 31, 2020.
Permitted repayments of RMDs previously distributed from an IRA.
In the case of an IRA owner or beneficiary who has already received a distribution of an amount that would have been an RMD in 2020 but for section 2203 of the CARES Act or section 114 of the SECURE Act, the recipient may repay the distribution to the distributing IRA, even if the repayment is made more than 60 days after the distribution, provided the repayment is made no later than August 31, 2020. The repayment will be treated as a rollover for purposes of § 408(d)(3) of the Code, but will not be treated as a rollover for purposes of the one rollover per 12-month period limitation in § 408(d)(3)(B) and the restriction on rollovers for nonspousal beneficiaries in § 408(d)(3)(C).
To read the entire notice, including the questions and answers section regarding the waiver of 2020 RMDs and a sample plan amendment, click here: Notice 2020-51.
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