The Internal Revenue Service reports anyone who already took a required minimum distribution (RMD) in 2020 from certain retirement accounts now has the opportunity to roll those funds back into a retirement account following the CARES Act RMD waiver for 2020.
The 60-day rollover period for any RMDs already taken this year has been extended to Aug. 31, 2020, to give taxpayers time to take advantage of this opportunity, according to an IRS news release.
The IRS described this change in Notice 2020-51 (PDF) and the notice also answers questions regarding the waiver of RMDs for 2020 under the Coronavirus Aid, Relief, and Economic Security Act, known as the CARES Act.
The CARES Act enabled any taxpayer with an RMD due in 2020 from a defined-contribution retirement plan, including a 401(k) or 403(b) plan, or an IRA, to skip those RMDs this year. This includes anyone who turned age 70 1/2 in 2019 and would have had to take the first RMD by April 1, 2020. This waiver does not apply to defined-benefit plans, the news release added.
In addition to the rollover opportunity, an IRA owner or beneficiary who has already received a distribution from an IRA of an amount that would have been an RMD in 2020 can repay the distribution to the IRA by Aug. 31, 2020. The notice provides that this repayment is not subject to the one rollover per 12-month period limitation and the restriction on rollovers for inherited IRAs.
The notice provides two sample amendments that employers may adopt to give plan participants and beneficiaries whose RMDs are waived a choice as to whether or not to receive the waived RMD.
Need More Time to File?
The IRS reports via a news release individual taxpayers who need additional time to file beyond the July 15 deadline, can request a filing extension two ways:
- Filing Form 4868 through their tax professional, tax software, or using the Free File link on IRS.gov.
- Submitting an electronic payment with Direct Pay, Electronic Federal Tax Payment System, or by debit, credit card, or digital wallet options and selecting Form 4868 or extension as the payment type. The automatic extension of time to file will process when they pay all or part of their taxes electronically by the July 15 due date. An extension to file is not an extension to pay. Taxes are still due by the July 15 due date.