This Year 2020 creates a rare opportunity for those who take distributions from their Retirement Accounts WITHOUT Penalty. If you or someone you know is a person who has a Pension and doesn’t need to take your RMD, but are forced to every year and pay taxes on the money then this will be of GREAT HELP to you.
There is GOOD NEWS under the CARES Act as it is NOT MANDATORY for Seniors and Retirees to take a required minimum distributions (RMDs) out of their IRAs and workplace Retirement Plans during the 2020 Tax Year.
The Coronavirus Aid, Relief, and Economic Security Act, or CARES Act, waives required minimum distributions during 2020 for IRAs and Retirement Plans, including Beneficiaries with Inherited Accounts. This waiver includes RMDs for Individuals who turned age 70 ½ in 2019 and would take their first RMD in 2020. Roth IRAs, do not require withdrawals until after the death of the Owner.
What if I already took RMDs?
1) If you’ve already taken RMDs in 2020, including someone who turned 70 ½ during 2019, that individual will have the option of returning the distribution amount back into their Retirement Account or other Qualified Plan.
2) Since the RMD rule is currently SUSPENDED, RMDs taken in 2020 are considered eligible for rollover. Therefore, RMDs can be rolled over to another IRA, another Qualified Retirement Plan, or as above, being returned back into their Account.
An IRA Owner or Beneficiary who has already received an RMD in 2020 can also repay the distribution to the distributing IRA NO LATER THAN Aug. 31, 2020, to avoid paying taxes on that distribution.
IRS Notice 2020-51 (PDF) also provides that the one rollover per 12-month period limitation and the restriction on rollovers to inherited IRAs do not apply to this repayment.
The CARES Act provisions apply to most Retirement Plans, including: Traditional IRAs, SEP IRAs, SIMPLE IRAs, 401(k) plans, 403(b) plans, 457(b) plans, profit sharing plans and other defined contribution plans. The RMD suspension does not apply to qualified defined benefit plans.
