Turning 72 (70 ½ before 2020) has meant you have to withdraw money from your traditional IRAs and 401K plan each year. These withdrawals are called Required Minimum Distributions or RMDs.
The CARES Act waived these RMDs for 2020 and for individuals who had already taken a distribution, rollover rules permitted some of the distributions to be returned to the IRA.
Notice 2020-51 has expanded the rollover rules. Withdrawals taken in 2020 are eligible to be returned to the IRA as long as the transaction is completed by August 31, 2020. This repayment will be treated as a tax-free rollover and isn’t subject to the “one rollover every 12 months” rule. Owners of inherited IRAs and other inherited plans also now qualify for the waiver. This gives retirees the flexibility to keep their money in their retirement account and recover any lost value because of market fluctuation related to COVID-19.
If you have questions regarding RMDs and repayment rollovers, please call our office!
Treasury Circular 230 Disclosure
Unless expressly stated otherwise, any federal tax advice contained in this communication is not intended or written to be used, and cannot be used or relied upon, for the purpose of avoiding penalties under the Internal Revenue Code, or for promoting, marketing, or recommending any transaction or matter addressed herein.