The CARES Act enabled any taxpayer with a required minimum distribution (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. However, this waiver does not apply to defined-benefit plans.
A recent update described in Notice 2020-51 provides that 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 August 31, thereby extending the original 60-day rollover period, provided that this repayment is not subject to the limitation of one rollover per 12-month period 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 to receive the waived RMD.
The information presented here should not be construed as legal, tax, accounting, or valuation advice. No one should act on such information without appropriate professional advice and after a thorough examination of the particular situation.