Posted By: Jordon Rosen, CPA, AEP
Originally Posted 6.24.2020 – Updated 6.29.2020
On June 23, the IRS issued Notice 2020-51 which provides additional guidance for those who otherwise needed to take required minimum distributions (RMDs) from IRAs and certain employer retirement plans during 2020 and now wish to roll those funds back into a qualified plan under the CARES Act provision which waives all RMDs for 2020. Below is an outline of the highlights of the CARES Act and Notice 2020-51:
- All RMDs, including those from inherited accounts, are waived for 2020.
- The waiver also applies to those who (1) turned age 70 ½ in 2019 and had to take their first RMD by April 1, 2020 and (2) those who turn age 72 in 2020 and elect to defer their 2020 RMD until April 1, 2021.
- The Notice waives the 60-day rule as well as the rule permitting only one rollover in a rolling 12-month period, if the RMD is rolled back into the qualified account no later than August 31, 2020. Therefore, all RMDs taken before the enactment of the CARES Act can be rolled back if done by August 31, 2020.
- Allows the plan owner or beneficiary who previously received a 2020 RMD to roll those funds back into a qualified plan so that it would not be included in their 2020 gross income.
- Updated: Funds taken from an inherited account must be repaid back to the same account. Funds taken from other types of retirement accounts may be rolled over into the same or any other qualified account (but you cannot roll a distribution from a non-Roth account tax-free into a Roth account).
- Allows employers to give plan participants and beneficiaries whose RMDs are waived, the ability to choose to receive or not receive the waived RMD.
- The Notice includes a Sample Plan Amendment for Defined Contribution Plans.
- The Notice confirms that the waiver does not apply to distributions from defined benefit plans.
BLS will continue to send important updates as information becomes available. Please reach out to your BLS Team Member or email us at email@example.com with any questions.
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