Did you take out a required minimum distribution (RMD) this year and want to put it back?
As part of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), RMDs are waived for 2020, including for inherited IRAs. The CARES waiver includes RMDs for individuals who turned age 70 ½ in 2019 and took their first RMD in 2020. If that seems like an odd add – and a conflict – remember that the Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE Act), which became law on December 20, 2019, also made significant changes to the RMD rules. It changed the age requirements to require withdrawal if you reached age 70 ½ in 2020 or later: in that case, you must take your first RMD by April 1 of the year after you reach 72. But, if you reached the age of 70½ in 2019, the old rules applied, and you were supposed to take your first RMD by April 1, 2020.
Supposed to. But the CARES Act pushes it off even more (except for those with Roth IRAs, but that doesn’t matter since Roth IRAs do not require withdrawals until after the owner’s death).
But what if you’ve already taken your RMD? The Internal Revenue Service (IRS) is now reminding IRA owners, beneficiaries or workplace retirement plan participants who received an RMD this year that they have until August 31 to rollover or repay the distribution to avoid paying taxes.
Yep. Since the RMD rules are suspended, RMDs taken in 2020 are considered eligible for rollover. Therefore, RMDs can be rolled over to another IRA or qualified retirement plan, or returned to the original plan. (There are some restrictions, including a one rollover per 12-month period limit and the exclusion of inherited IRAs on rollovers, so check out IRS Notice 2020-51 (downloads as a PDF) for more information.)
The CARES Act provisions apply to most retirement plans, including traditional IRAs, SEP IRAs, SIMPLE IRAs, 401(k) plans, 403(b) plans, 457(b) plans, profit-sharing plans, and other defined-contribution plans. But the RMD suspension does not apply to qualified defined benefit plans (like pension plans).
You can find out more about RMDs here.