IRA Rollover Exception | Ed Slott and Company, LLC

IRA Rollover Exception

If one has withdrawn more than the RMD amount in 2020, is he allowed to roll all of the distribution back into the IRA if done before August 31?

Is it correct that the three-year rule only applies to a CRD?

Yes, the 3 year rollover ability only applies to a CRD. The 8/31 non CRD rollover deadline only applies to the amount that would otherwise have been an RMD for 2020. The additional amount distributed over the RMD amount can only be rolled back under the normal rules, that is subject to the 60 day deadline and the one rollover rule, but the 60 day deadline was extended to 7/15 for those who took distributions of any amount between 2/1 and 5/15. Therefore, rolling over the rest of the distribution depends on the date it was distributed and the one rollover limitation.

In light of Notice 2020-51, it appears that a rollover of an “RMD” is not subject to the “one rollover within 12 months” rule.  Does that apply only to 2020 “RMD” payments done in more than one distribution or does it mean that “RMD” rollovers are ignored and rollovers of non-“RMD” amounts are permitted in the following cases?A.    Client takes “RMD” of $5,000 in Jan. 2020.  She rolls it over by Aug. 31.  She then takes $10,000 distribution on Sep. 1 and rolls it back on Sep. 30th.B.    Client takes RMD of $4,000 in Jan. 2019.  She takes a distribution of $6,000 on June 1, 2019 and rolls it over on June 30, 2019.  She takes her “RMD” of $5,000 in Jan. 2020 and rolls it over on July 15, 2020.  She takes another distribution of $7,000 on Sep. 1 and rolls it over on Sep. 30th.C.   Same scenario as B, except the $5,000 is taken via $1,000 distributions over the first 5 months of 2020.

  • Repayments to the distributing IRA of what would have been an RMD for 2020 were it not for section 2203 of the CARES Act are completely disregarded with respect to the one-rollover-per-12-months rule.  They do not impair the ability to rollover some or all of a distribution that would not have been an RMD.
  • A. No problem.  The repayment under Notice 2020-51 of the $5,000 January 2020 distribution is disregarded.
  • B. No problem.  The repayment under Notice 2020-51 of the $5,000 January 2020 distribution is disregarded and September 30 , 2020 is more than a year after June 30, 2019.
  • C. No problem.  The repayment under Notice 2020-51 of the 5 $1,000 distributions is disregarded, so this ends up being the same as scenario B.
 

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