The IRS today issued a release as a reminder to individual taxpayers that the deadline to rollover or repay retirement plan “required minimum distributions” (RMD) is August 31, 2020.
As noted in today’s IRS release—IR-2020-187—certain RMDs that are not rolled over or repaid could be subject to income tax.
The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) (Pub. L. No. 116-136)—legislation enacted to provide relief in response to the coronavirus (COVID-19) pandemic—includes a provision to waive RMDs during 2020 for individual retirement accounts (IRAs) and retirement plans, including for beneficiaries with inherited accounts.
As the IRS explained, because the RMD rule is suspended, RMDs taken in 2020 are considered eligible for rollover. Therefore, RMDs can be rolled over to another IRA, another qualified retirement plan or returned to the original plan by August 31, 2020, to avoid paying taxes on that distribution.
IRS Notice 2020-51 also provides that the one rollover per 12-month period limitation and the restriction on rollovers to inherited IRAs do not apply to this repayment rule. Read TaxNewsFlash
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