RMD Waived / 60 Day Rule | Ed Slott and Company, LLC

RMD Waived / 60 Day Rule

I withdrew my RMD in January. Is there any changes in the 60 day rule in the CARES act. I would like to pay back some of the RMD thatI took in January.

  • The IRS in Notice 2020-23 stated that distributions made starting in February now have until 7/15 to be rolled back. That was based on actions with a 4/1 or later deadline. Unfortunately, a January distribution, even when done 1/31 had a rollover deadline prior to 4/1. No help for January distributions taken an RMDs that turned out not to be RMDs after all.
  • That said, a January distribution might qualify as a corona virus distribution if you qualify for it according to CARES. And the IRS may broaden the eligibility for these distributions, which is widely expected. Once you qualify you have 3 years to roll the January distribution back. Therefore, keep monitoring the IRS site or varius sites like this for any updates.

I withdrew 44100 from my IRA in January 2020. I did a second withdrawal of 400 in February 2020. The first withdrawal in January was equal to my total RMD requirement.Based on the latest notification that was released today  I can rollback the 44100 in one lump sum or several rollbacks by 08/31/2020. The amount I can rollback will exclude taxes taken in January of 4410. So my maximum rollback amount would be 39690. Also I cannot rollback February’s withdraw because it is not an RMD. Is all of this correct? 

The amount you can roll back per Notice 2020-51 is the entire 44,100 would be RMD.  You would have to come up with the 4410 from your other funds to make the rollover complete. This rollover would not count against the one rollover rule. Because of that you could also roll back the Feb distribution of 400 by 7/15 per the original CARES Act extended deadline for time sensitive actions. This 400 would be subject to the one rollover limit, and you might qualify but also may not want to use up your one permitted rollover subject to the limit for such a small amount.

Thanks for the quick response. You mention that IRS may broaden eligibility. Does that mean they may accept January’s RMD? If they do I will take back part of my January RMD in 2020. I expect I can reduce my income for 2020 by taking back some of January’s RMD If allowed.

  • They might, but haven't released any guidance so far. Did you check the current qualifications to see if you might qualify already?  The section that might be broadened or you might already qualify is copied below.
  • (III) who experiences adverse financial consequences as a result of being quarantined, being furloughed  or laid off or having work hours reduced due to such virus or disease, being unable to work due to lack of  child care due to such virus or disease, closing or reducing hours of a business owned or operated by the in-dividual due to such virus or disease, or other factors as determined by the Secretary of the Treasury (or the Secretary’s delegate). 
 

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