RMD 2020 and 60 day rule (CARES ACT) | Ed Slott and Company, LLC

RMD 2020 and 60 day rule (CARES ACT)

Can a RMD be reversed in 2020? If so, when? Was there a change with respect to the 60 day rule? Is it retroactive to the beginning of the year?

Taxpayer received form 1099-R with a taxable distribution with code 7.  However taxpayer claims that he rolled over the entire distribution back into an IRA.  Questions:1) Shouldn't the code be "G" if it was rolled over?2) Should we ask the custodian to correct the forms?3) Is there an easy way to reconcile this to form 5498?  

  • Yes, amounts up to the RMD distributed anytime in 2020 can be rolled back by 8/31 without regard to the 60 day time limit or the one rollover limit for 12 months. The rollover must be made to the IRA that distributed the would be RMD.
  • Re 1099R.  Code 7 is correct as the IRA custodian does not know if the distribution was rolled over or not unless it was a direct transfer, and there is no 1099R for a direct transfer.  The taxpayer must report the rollover on lines 4a and 4b of Form 1040. Form 5498 is issued by the receiving custodian reporting either a regular contribution or a rollover contribution. The IRS then computer matches the 1099R with the 5498 to verify that the distribution was actually rolled over. Due to Covid extensions, the 5498 for 2019 may not be issued yet.  Not sure if this distribution is the same one you were referring to in prior post relative to an RMD rollback. Non RMD amounts are subject to different rollover rules depending on when the distribution took place.
 

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