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Mom (or Dad) Missed the Rollover Window for Her RMD. Now What?

Taxes

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:

Unwrapping the CARES Act


Military Finances 201: Should Mom (or Dad) Skip an RMD?


Military Finances 301: Mom (or Dad) Missed Her RMD. Now What?





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