As part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, most of us were provided with what was referred to as “RMD relief,” meaning that we would not have to take required minimum distributions (RMDs) from our retirement accounts in 2020 if we did not want to for a number of reasons.
While thoughtful, this “relief” brought up a handful of issues. Particularly regarding those who already took their distributions, those who receive distributions at regular monthly intervals and those who were limited by the once per year rollover rule. Also, the CARES Act didn’t become effective until March. What about everything that took place prior to that date?
After much back and forth between the IRS and taxpayers and their professionals, the service has completely capitulated. On June 23, 2020 the IRS has stated in Notice 2020-51 that we can now return any 2020 RMDs that were already taken as long as we do so by August 31, 2020.
This notice simplifies the RMD relief issue immensely. Now, instead of having to navigate a myriad of complicated retirement account rules and recent legislation, we can simply just return any 2020 required minimum distribution that was already taken regardless of, well just about anything.
It doesn’t matter anymore if you’re the account owner or the beneficiary. It doesn’t matter if you took your RMD in January or just last week. It doesn’t even matter if you already used your “once per year” rollover. This notice from the IRS says that we can now return any 2020 RMDs that were already taken in 2020 back into retirement accounts regardless of the normally limiting rules. The only limitation is that you must do so by August 31, 2020. After that all bets are off.
To reiterate, if you have distributed any unwanted 2020 RMDs that you would like to put back, you can do so by August 31,2020. If you think this pertains to you, please give us a call so we can walk you through the process and what it means for your particular scenario and financial circumstances.
Casey Pisano, CFP®