Did You Take a Required Minimum Distribution for 2020?
The CARES Act, enacted in March 2020, included a provision that allows taxpayers with a required minimum distribution (RMD) due in 2020 to skip them this year. This waiver applies to RMDs from a defined-contribution retirement plan, including a 401(k) or 403(b) plan, or an IRA, but it does not apply to defined-benefit plans. This waiver also applies to anyone who turned age 70-1/2 in 2019 and had to take the first RMD by April 1, 2020.
In June of this year, the IRS released Notice 2020-51, which offers important — but temporary – relief. Anyone who has taken an RMD in 2020 from the retirement accounts referenced above, now can return those funds back into a retirement account by August 31 and not have the distribution be taxable.
What Should You Do?
This is great news for those individuals who took RMDs, but did not need the funds. By returning these distributions, you can reduce your current-year taxable income and allow the funds to grow tax-deferred for an additional year.
Please contact us at 401-831-0200 if you have questions about your RMDs or the rollover relief available until August 31.