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RMD Rules Different for 2020, IRS Reminds

Practice Management
The IRS on July 17 issued a reminder that under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, the rules regarding required minimum distributions (RMDs) are different in 2020.
 
The CARES Act waives RMDs during 2020 for IRAs and retirement plans, including beneficiaries with inherited accounts, the IRS reminds. This waiver, it notes, includes RMDs for individuals who turned age 70½ in 2019 and took their first RMD in 2020.
 
Even though the waiver is in place, a plan is not required to stop distributions in 2020 that would have been RMDs but for the CARES Act, notes American Retirement Association’s Retirement Education Counsel Robert M. Richter. He adds that even though the law does not require an RMD, a plan’s provisions that provide for minimum distributions still can be followed. Richter notes that the CARES Act provides that the distributions are not treated as eligible rollover distributions if they would have been ineligible if the CARES Act had not been enacted. Thus, he says, a plan that continues to follow the existing plan terms can continue to treat the distributions as though they were RMDs for processing purposes.
 
No distributions from a defined contribution plan or IRA made in 2020 are RMDs, Richter notes. The distribution that would have been an RMD rather is an eligible rollover distribution and can be rolled back into the same plan, if the plan allows that, or to any other plan or IRA that may accept eligible rollovers.  
 
Remember Aug. 31
 
The IRS also cautions that an IRA owner or beneficiary who has already received an RMD in 2020 and who wants to repay the distribution to the distributing IRA must do so no later than Aug. 31, 2020, to avoid paying taxes on that distribution.