Inherited IRA – CARES act

Submitted by Robert Roselli on Wed, 2020-07-29 16:57

My understanding is that Inherited IRAs traditionally haven’t been eligible for a 60-day rollover. I had heard that they are eligible for a 60-day rollover up until August 31st. Is this true?



Submitted by Alan - IRA critic on Wed, 2020-07-29 18:16

Yes, this is true. With reference to non spouse inherited IRA distributions that are never rollover eligible, a one time exception has been made in Notice 2020-51 to allow distributions that would have been RMDs for 2020  taken anytime in 2020 to be rolled back to the distributing IRA account by 8/31. Note that these amounts are limited to those that would have been RMDs had RMDs not been waived for 2020 and the  one rollover limit is waived in the event there was more than one such distribution.  



Submitted by Robert Roselli on Wed, 2020-07-29 20:56

1) If someone took $ 500/month from January-July and these were RMDs. they would now be allowed to put the whole $ 3,500 (500*7) back by August 31st whether it was a Traditional IRA or Inherited IRA?2) When the CARES act passed in March, wouldn’t the original rule allowed my client to put back only one of those $ 500/month withdrawals?



Submitted by Alan - IRA critic on Wed, 2020-07-29 21:09

The entire 3500 can be returned to the distributing IRA accounts under 2020-51. The original rollover relief did not fully address certain situations like the one rollover limitation, expiration of the 60 days for January distributions, or return of inherited IRA distributions that would have been RMDs. Notice 2020-51 pretty much provided rollover relief for these situations. The notice even covers 2019 RMDs for people with RBDs on 4/1/2020 who chose to take out those RMDs in 2020.



Submitted by Robert Roselli on Wed, 2020-07-29 21:31

That was a great explanation. Looks like I’ll have a busy August 



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