IRS Notice Details RMD Rollback Process Under CARES Act

The Internal Revenue Service (IRS) has published Notice 2020-51, through which it is providing rollover relief for required minimum distributions (RMDs) from retirement accounts that were waived under the Coronavirus Aid, Relief and Economic Security (CARES) Act.

The upshot of the relief is that anyone who already took an RMD in 2020 from certain retirement accounts now has the opportunity to roll those funds back into a retirement account following the CARES Act RMD waiver for 2020.

The notice provides that this repayment is not subject to the one rollover per 12-month period limitation and the restriction on rollovers for inherited individual retirement accounts (IRAs). It also provides two sample amendments that employers may adopt to give plan participants and beneficiaries whose RMDs are waived a choice as to whether or not to receive the waived RMD.

Under Notice 2020-51, the 60-day rollover period for any RMDs already taken this year has been extended to August 31. The notice answers questions regarding the waiver of RMDs for 2020 under the CARES Act. That law enables any taxpayer with an RMD due in 2020 from a defined contribution (DC) retirement plan—including a 401(k), 403(b) or IRA—to skip those RMDs this year. This includes anyone who turned age 70.5 in 2019 and would have had to take the first RMD by April 1, 2020.