United States

More who took those RMDs before they were waived can now put them back

TAX ALERT  | 

On April 9, 2020 the IRS issued Notice 2020-23, which amplifies prior guidance in Rev. Proc. 2018-58, for ‘Specified Time-Sensitive Acts’ due to the COVID-19 emergency.    

With respect to IRAs and defined contributions plans, the Coronavirus Aid, Relief and Economic Security Act waived all required minimum distributions (RMDs) in 2020, including those 2019 RMDs received in 2020. What’s more, individuals who already took RMDs in 2020 had 60 days from the date of the distribution to put it back into the account they took it from or into another qualified defined contribution plan or IRA (so long as they had not done an IRA-to-IRA rollover within the past 12 months). These rules also apply to those individuals who inherited an IRA from a deceased spouse. 

Notice 2020-23 gives affected taxpayers until July 15, 2020 to perform all Specified Time-Sensitive Actions that are due to be performed on or after April 1, 2020 and before July 15, 2020. Rev. Proc. 2018-58 defines rollovers that otherwise must be accomplished within 60 days as Specified Time-Sensitive Actions. In practical terms, the effect of this new leeway is that RMDs taken between Feb. 1, 2020 and May 15, 2020 have until July 15, 2020, to be rolled over. That is because an individual who took an RMD on Feb. 1, 2020, otherwise had 60 days until April 1, 2020 to put the distribution back into the account or another IRA. Now, under the Notice, an RMD taken between Feb. 1, 2020 and May 15, 2020 can be put back into the account or rolled over to another qualified account by July 15, 2020. So again, as a practical matter, the Notice will give many individuals who took RMDs in early February more time to determine whether they want to put the distribution back into their account. 

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