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The Slott Report

RMDs & Roth IRAs: Today's Slott Report Mailbag

Question: I took 25% of my 2020 required minimum distribution (RMD) from an inherited IRA on March 15, 2020. Can that be “undone” in accordance with the CARES Act and if so, how? Thanks. Audrey Answer: Hi Audrey, The CARES Act waives RMDs for 2020. The waiver does include inherited IRAs. However, any amounts already taken from an inherited IRA by a nonspouse beneficiary cannot be rolled over. That is because the regular rollover rules still apply, and those rules do not allow a nonspouse beneficiary to do rollovers. If you are a spouse beneficiary, the rules are different.

Rolling Over an RMD, Part 2 – “Just Wait a Minute”

I grew up in the northeast, where snow squalls sweep across Lake Ontario and cede to blue skies, where 85-degree summer days change to a biting rain at a moment’s notice. The folksy phrase around town was, “If you don’t like the weather, just wait a minute.” Only nine days ago I wrote in the Slott Report about rolling over required minimum distributions (RMDs). Since the “Coronavirus Aid, Relief, and Economic Security Act,” (CARES Act) waived 2020 RMDs (and first-time 2019 RMDs not withdrawn by April 1), my article addressed how many of these RMDs, if already taken, can now be rolled over - as long as the account owner follows the normal rollover rules.


The recently-enacted Coronavirus Aid, Relief, and Economic Security Act (CARES Act) signed by President Trump on March 27, 2020, allows “qualified individuals” to take up to $100,000 of penalty-free IRA and company plan withdrawals during 2020. “Qualified individuals” include those who are (or whose family members are) sickened by the virus or who have virus-related adverse financial consequences. But what if you are lucky enough not to be a “qualified individual,” but still have extraordinary bills to pay? You should always look first to other non-retirement plan savings to pay your expenses. Any IRA or company plan savings you tap into will mean less available funds at retirement. The next source of savings should be your IRAs. IRA withdrawals are easier and faster than company plan distributions.

QCDs and Roth Conversions: Today's Slott Report Mailbag

Question: Hi. What are the rules for QCDs now that required minimum distributions (RMDs) have been cancelled for 2020? Thanks for your help. Jerry Answer: Jerry, Qualified charitable distributions (QCDs) are unaffected by the CARES Act. Even though RMDs are waived for 2020, you can still do a QCD if you otherwise qualify. While QCDs are a popular way to offset the income from an RMD, they are not required to coincide with an RMD. “Voluntary” withdrawals can just as easily be removed from income by a QCD.

No “First Money Out” Rule for 2020

On March 27, the massive “Coronavirus Aid, Relief, and Economic Security Act,” or the “CARES Act,” was signed into law. The CARES Act includes a waiver of required minimum distributions (RMDs) for 2020. This waiver applies to company savings plans and IRAs, including both traditional and Roth inherited IRAs. The waiver of RMDs for 2020 has raised many questions. One question that we have been hearing a lot is: What is the effect of the waiver on the “first money out” rule? How the First Money Out Rule Works The first money out rule says that the first money you take out of your IRA or plan in a year when you have to take an RMD is considered to be your RMD for the year. An RMD cannot be rolled over or converted.

Rolling Over an RMD

Like most people’s lives, the retirement world is upside down. This is made evident by a single statement: “Required minimum distributions (RMDs) can be rolled over.” Yes, that is the new normal – at least for this year. RMDs are considered the first money out of an IRA and workplace plan. Typically, these dollars are ineligible to be rolled over to either another plan or IRA. The RMD always had to be taken first. If an RMD was erroneously rolled over, it was an excess contribution and the appropriate fix-it steps had to be followed. But those hard-and-fast rules are no more for 2020. As we have written in the Slott Report, the “Coronavirus Aid, Relief, and Economic Security Act,” or the “CARES Act,” was signed into law on March 27. The Act includes a waiver of RMDs for this year from company savings plans and IRAs. In addition, the CARES Act impacts 2019 RMDs for those who reached age 70 ½ in 2019 and have a required beginning date of April 1, 2020.


Question: The virus pandemic has prompted legislation that has eliminated the requirement for me to take a required minimum distribution (RMD) from my IRA for the year 2020. Am I therefore allowed to do a partial Roth IRA conversion in 2020 without having to take 2020 RMD first? Answer: Yes. The CARES Act RMD waiver for 2020 means you are not required to receive your RMD before doing a Roth IRA conversion in 2020 – or at any time. The same rule applies to any 2020 IRA rollover for anyone who would normally have an RMD due.

CARES Act Relief for Retirement Distributions and Plan Loans

The recently-enacted “Coronavirus Aid, Relief, and Economic Security Act,” or CARES Act, includes special tax relief for IRA and company plan withdrawals made in 2020 and for company plan loans. Who gets relief? Both the distribution and plan loan relief apply only to “qualified individuals.” Not everyone meets this definition. The definition includes: · individuals diagnosed with the SARS-CoV-2 or COVID-19 virus by a test approved by the CDC; · individuals whose spouse or dependent is diagnosed; · individuals who experience “adverse financial consequences” on account of: > being quarantined; > being furloughed or laid off or having work hours reduced; > being unable to work due to lack of child care; or > closing or reducing hours of a business owned or operated by the individual. The law gives the Secretary of the Treasury the authority to expand this definition.

Coronavirus Relief for Retirement Accounts

As the coronavirus pandemic has spread, many Americans have been hit hard. Their retirement accounts have also taken a serious blow as markets have plummeted. In these tough times, there is a bit of good news as the government has come through with some relief for retirement savers. IRA Deadline Extended until July 15 The IRS has extended the tax-filing deadline for 2019 federal income tax returns from April 15 to July 15. The extension of the tax-filing deadline also postpones the deadline for making 2019 prior-year contributions to traditional and Roth IRAs from April 15 to July 15.

The Tax Filing Deadline and Children Under the SECURE Act: Today's Slott Report Mailbag

Question: With the COVID-19 changes to push the tax filing back to July 31st, can someone still make a 2019 contribution until that date or do all contributions need to be made by the usual April 15th deadline this year? Jerry Answer: Hi Jerry, This is a question we have been getting a lot! The IRS has confirmed that the deadline for making both traditional and Roth IRA prior year contributions has been delayed to July 15, along with the tax-filing deadline.

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