2020 will probably turn out to be one for the records books when it comes to the tax code. That has to do with the many changes included in the CARES Act. One of the changes was that the CARES Act allows the skipping of all Required Minimum Distributions (RMD). That includes both IRAs and employer retirement plans. But what about those who took their RMD before the CARES Act became law (March 27)?
Originally, it looked like the only option available would be to roll over the RMD into an IRA using the 60-day rollover rule. But that didn't do anything for those who took the funds out in the early parts of January. Also, some couldn't roll over due to the once-per year rollover rule. And finally, rollovers aren't allowed for inherited IRAs.
Then the IRS took an interim step and extended the 60-day window to July 15th for those who took the RMD on February 1st or later.
In recent guidance (Notice 2020-51), the IRS loosened the rules even further:
All RMDs can be rolled over as long as they are done by August 31st
Suspended the once-per year rollover rule
Allows beneficiaries to roll over funds to undue the RMD
There are still a lot of things about the CARES Act we're learning. We'll keep you up to date.
If you found this article useful, you might like the following blog posts:
Disclaimer
Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by C.L. Sheldon & Company, LLC ), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. C.L. Sheldon & Company, LLC does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to C.L. Sheldon & Company, LLC website or incorporated herein, and C.L. Sheldon & Company, LLC takes no responsibility therefore. All such information is provided solely for convenience, educational, and informational purposes only and all users thereof should be guided accordingly. Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from C.L. Sheldon & Company, LLC . To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. C.L. Sheldon & Company, LLC is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. A copy of the C.L. Sheldon & Company, LLC ’s current written disclosure statement discussing our advisory services and fees is available for review upon request. DISCLAIMER OF TAX ADVICE: Any discussion contained herein cannot be considered to be tax advice. Actual tax advice would require a detailed and careful analysis of the facts and applicable law, which we expect would be time consuming and costly. We have not made and have not been asked to make that type of analysis in connection with any advice given in this blog post. As a result, we are required to advise you that any Federal tax advice rendered in this blog is not intended or written to be used and cannot be used for the purpose of avoiding penalties that may be imposed by the IRS. In the event you would like us to perform the type of analysis that is necessary for us to provide an opinion, that does not require the above disclaimer, as always, please feel free to contact us.
