4 CARES Act Misconceptions
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4 CARES Act Misconceptions

By Ian Berger, JD
IRA Analyst

Sarah Brenner

The Coronavirus Aid, Relief and Economic Recovery Act (CARES Act), signed into law on March 27, includes several important retirement-related provisions. Because some of these provisions are confusing, several misconceptions about the new law have arisen. In this edition of the Slott Report, we will attempt to set the record straight.

Misconception #1: Everyone is eligible for a CRD. The CARES Act allows individuals to withdraw up to $100,000 of IRA and company plan funds during 2020 and receive special tax breaks. These withdrawals are called “coronavirus-related distributions” (CRDs). However, not everyone is eligible to take these withdrawals and qualify for the relief. Under current rules, you are eligible only if you are in one of these categories:

  • you are diagnosed with the SARS-CoV-2 or COVID-19 virus by a test approved by the CDC;
  • you or your spouse or dependent is diagnosed; or
  • you experience “adverse financial consequences” on account of:- being quarantined;- being furloughed or laid off or having work hours reduced;- being unable to work due to lack of child care; or- closing or reducing hours of a business you owned or operated.

Complex legislation in CARES Act Continues to Generate New Inquiries


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

The CARES Act suspended RMDs for 2020, but I already took my RMD. Can I now return it and eliminate the tax bill?

Maybe. The CARES Act waived RMDs for 2020, but some people had already taken them and now want to know if they can be returned. By “returned” they are referring to rolling the funds back to an IRA or company plan, which would eliminate the tax bill, as if the RMD never happened. So, the first step is to see if the funds are eligible to be rolled over.

Normally, RMDs cannot be rolled over or returned to an IRA or plan. But since the CARES Act waived RMDs due in 2020, the RMD you took is no longer classified as an RMD, so it can be rolled over, but only if it meets these tests:


Q: Did the SECURE Act change the rules for designated non-spouse inheritors of a Roth IRA? I believe they used to be able to take distributions based on their life expectancy. Does the 10-year rule also apply to Roth IRAs?


Q: What are the rules for QCDs now that required minimum distributions (RMDs) have been cancelled for 2020?


Q: I took 25% of my 2020 required minimum distribution (RMD) from an inherited IRA on March 15, 2020. Can that be “undone” in accordance with the CARES Act and if so, how?


Q: I have a couple of clients that make over a million dollars a year. Could they make non-deductible contributions to a Traditional IRA and then convert to a Roth IRA?


Have a question for our IRA Technical Team?
Email your questions to us at mailbag@irahelp.com. Selected questions will be featured every Thursday in the Slott Report.

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