IRS Extends 2020 Rollover Period and Other Deadlines for Retirement Account RMDs

In March, the CARES Act provided taxpayers opportunity to skip this year’s (2020) required minimum distribution (RMD) from their retirement accounts. The provision was available even if the taxpayer had already taken his or her distribution before the Act was passed. For those individuals, the IRS issued Notice 2020-51, which allows previously taken RMDs to be rolled back into retirement accounts. The provision was extended until August 31, and taxpayers don’t need to amend the terms of their IRA if they choose to take advantage of the RMD waiver.

Also, if a plan holder passed away in 2019, Notice 2020-51 highlights further extensions for beneficiaries to make certain elections. For example, some plans permit the employee or beneficiary to elect whether RMDs are determined using a five-year rule or a life expectancy rule. Under 2020-51, elections that were due to be made in 2020 resulting from a plan holder’s death in 2019 now have until the end of 2021 to complete the election. This applies to non-spouse designated beneficiaries of plan holders who passed away in 2019 as well. Those beneficiaries also have until 2021 to make a direct rollover and opt to use the life expectancy rate.

An IRA trustee, issuer or custodian is required to notify IRA owners that no RMD is due for the year 2020, which may be accomplished if a copy of Form 5498 (filed with the IRS) is provided to the owner.

If you have questions regarding the above information or would like to discuss further, please don’t hesitate to contact our office.