The Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law on Friday, March 27, 2020.
The legislation includes numerous provisions related to retirement accounts, one of which is waiving Required Minimum Distributions (RMDs) for 2020. Individuals who have not yet taken their RMDs can forego them for 2020. The waiver includes RMDs from IRAs, 401(k)s and 403(b)s. It also includes RMDs for those who turned 70 ½ in 2019 and delayed the RMD until 4/1/2020. Those individuals should be able to waive both the 2019 and the 2020 RMD.
The legislation does not address RMDs that were already taken in 2020. Hopefully, guidance will be forthcoming soon. In the meantime, individuals who have taken 2020 RMDs in the past 60 days should be able to rollover that distribution, if they have not had any rollovers in the past 365 days. Tax experts believe that although rollovers of RMDs are disallowed, because of the CARES Act, 2020 distributions from retirement accounts are no longer considered RMDs and are therefore eligible for rollovers (if they take place within 60 days of the distribution and the 365-day rule is satisfied). If you have taken your RMD for 2020 within the past 60 days, you may want to consult your tax advisor about putting these funds back into your IRA or qualified plan.
Inherited IRAs are eligible for the 2020 waiver, but distributions that were already made are not eligible for the 60-day rollover. Consequently, you may need to wait for guidance about whether these RMDs may be re-contributed to the IRA if you want to avoid inclusion of the RMD amount in your 2020 income.
Individuals who waive 2020 RMDs will not be required to double-up next year. Their 2021 RMDs will be calculated, as usual, based on 2020 year-end balances.