RMD waivers for what retirement accts? | Ed Slott and Company, LLC

RMD waivers for what retirement accts?

We have a client who is 87 with a 457 plan from her husband working with the County and took her RMD for 2020. But wants to roll it over due to the cares act.

However, I just read this in Forbes:
The RMD rules "don’t apply" for calendar year 2020 to all defined contributions retirement plans, including IRAs, 401(k)s, 403(b)s, SEP IRAs, SIMPLE IRAs, traditional IRAs and Roth IRAs. A 457 plan sponsored by a non-government tax-exempt employer doesn’t qualify for the suspension of RMDs.

Should it have read "does apply" or is it stated right that the rule does not apply to all these retirement plans?

Thank you for any clarification.

Douglas

  • They apparently meant that there are some types of DC plans to which the RMD waiver in the CARES Act does not apply. A non govt 457 plan is such a plan. The waiver does apply to the other plans mentioned, although a Roth IRA does not have an RMD to waive unless it is an inherited Roth IRA. In this case, the client apparently has a govt 457b inherited from her husband from which the beneficiary RMD was waived for 2020, and if so she should be able to roll it over to an inherited IRA by 8/31 if the 457b will not accept the return of the RMD under Notice 2020-51.
  • That said, since this is a govt 457b, why hasn't she rolled it over to her own IRA?  RMDs would be much smaller when they resume in 2021. In certain cases, her own beneficiary inheriting the 457b might be subject to a lump sum distribution, while inheriting an IRA would at least provide a 10 year distribution period.
 

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