IRS Extends Rollover Deadline for 2020 RMDs


By Ian Berger, JD
IRA Analyst

The IRS has extended the rollover deadline for required minimum distributions (RMDs) taken from IRAs or company plans in 2020. In Notice 2020-51, released on June 23, the IRS said that any unwanted 2020 RMDs can be repaid via rollover to an IRA or company plan by August 31, 2020.

Normally, RMDs cannot be rolled over. However, the CARES Act waived 2020 RMDs (and first-time 2019 RMDs delayed until 2020) from IRAs and defined contribution plans. For this reason, amounts received in 2020 that would have been RMDs are eligible for rollover since they are technically not RMDs.

Many individuals had already received RMDs before the CARES Act was signed into law and wanted to repay those amounts to avoid paying taxes on the RMD. Earlier this year, the IRS extended the 60-day rollover deadline until July 15, 2020 for distributions made after January 31, 2020. Individuals receiving RMDs in January 2020 were out of luck. In addition, the once-per-year rollover rule prevented those receiving monthly RMDs from rolling over each RMD. (That rule prohibits an IRA owner from making more than one traditional IRA-to-traditional IRA or Roth IRA-to-Roth IRA rollover in any 12-month period.) Finally, non-spouse beneficiaries were unable to roll over RMDs from inherited IRAs since non-spouse beneficiaries can never do rollovers.


IRS Lets Taxpayers Return January RMDs

Every month, IRA expert Ed Slott is taking your questions about Individual Retirement Accounts on AARP:

I took my 2020 required minimum distribution (RMD) back in January before the law changed, allowing 2020 RMDs to be waived. Can I return those funds and eliminate the tax?

Yes, you can! But you must do it before Aug. 31.

The answer was a different one when this question was asked earlier in the year, but the IRS has released new relief provisions for unwanted RMDs (IRS Notice 2020-51, issued June 23).

The CARES Act waived RMDs due in 2020, but that law was not enacted until March 27, and by that time some folks had already taken their RMDs and would have owed the tax on those withdrawals. Once the law waived 2020 RMDs, some of these people cried foul, since they had already taken the funds.


Q: Under the SECURE Act, if we can assume a Special Needs Trust can qualify for the stretch via the disabled beneficiary, what happens when the special needs trust beneficiary passes? The next named beneficiary (remainder) is a brother and/or nephew under this trust. Yet it's already an inherited IRA. Would that formula continue to the next remainder beneficiary in line, i.e., would the stretch continue?


Q: If a person takes that 100k distribution, can they elect to split evenly in 2020-2022 as income? Or can they determine how to apply the income?


Q: I understand that I don’t have to take any RMDs during 2020. However, is the CARES Act rule that it is an-all-or-nothing for RMDs or can I take a portion of my RMD for 2020 but not all?


Q: I take my RMDs spread over a monthly basis on the 6th of each month. (I have taken four in 2020 - Jan, Feb, Mar, Apr). Under the new legislation that extends the "60-day rollover window" for distributions taken on or after February 1, 2020 to July 15, 2020, am I able to roll back all three distributions (Feb, Mar and Apr) in one contribution (rollover) into my IRA, or am I limited to only being able to roll back one month's worth of distributions?


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