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The CARES Act Waives RMDs for 2020

In response to the COVID-19 outbreak, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) became law in March 2020. The CARES Act includes a waiver of required minimum distributions (RMDs) for 2020. The RMD waiver applies to all Individual Retirement Accounts and Annuities (including SEP and SIMPLE IRAs), as well as defined contribution plan accounts, such as those under 401(k), profit sharing, money purchase pension, 403(b), 457(b) governmental employers plans, and the Federal Thrift Savings Plan (TSP). The following are some highlights of the RMD waiver:

  • RMDs are not waived for defined benefit pension plans.
  • RMDs are waived for both owners and beneficiaries, including beneficiaries of inherited accounts.
  • 2019 RMDs are waived only if the taxpayer’s first RMD year is 2019, and the RMD was not taken by December
    31, 2019.
  • RMDs that were taken during 2020 by an owner or a surviving spouse beneficiary become “non-RMDs” by the
    CARES Act and are eligible for rollover to other qualified plans. These rollovers are generally required to be
    completed within 60 days of receipt. Caution: If the distribution is made from an IRA, it is subject to the one-per-year
    rollover rule.
  • RMDs from non-spouse beneficiary accounts may not be rolled over.
  • The 5-Year Rule for death benefit distributions is extended by one year.
  • The RMD waiver does not mean distributions cannot be made. Taxpayers who rely on their RMDs to cover living
    expenses can still take distributions.

Taxpayers who would like to return an unwanted RMD taken before the CARES Act waiver should consult with their advisors
to determine if it can be returned. Questions to consider include:

  • How can scheduled RMDs be suspended? A taxpayer who takes periodic distributions from IRAs would only be eligible to roll over one of those to a same-type IRA from which the distribution was made.
  • Can an unwanted RMD be rolled over into an employer-sponsored qualified plan that accepts rollovers?
  • Can an unwanted IRA distribution be considered a Coronavirus Related Distribution and treated as a trustee-to-trustee
  • Should a Roth conversion of unwanted RMDs of IRA distributions that
    cannot be rolled to a Traditional IRA be made, so that the future earnings
    are tax-free?

While the Internal Revenue Service will likely issue further guidance and grant additional relief regarding rolling back unwanted RMDs, waiting for that to occur could be risky.

If you have any questions or would like more information, please contact Therese Cheevers at or 844.4WINDES (844.494.6337).
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