July 3, 2020

On June 23, 2020, the IRS issued Notice 2020-51, which provided rollover relief for many Required Minimum Distribution (RMD) payments made in 2020.[1]  For your consideration, the following highlights are from that notice. 

The IRS has extended the rollover deadline for RMDs taken from IRAs or company plans in 2020.  The IRS has stated that any unwanted 2020 RMDs may be repaid via rollover to the original IRA or company plan by August 31, 2020.  This now covers those individuals who took RMDs in January 2020, and who would like to return the funds to their IRAs or company plans to avoid incurring tax on the distributions.

The RMD payments will NOT count against the once-per-year rollover rule.  This will allow individuals who have been taking monthly RMDs to repay them all.

Notice 2020-51, also provided an exception for non-spouse beneficiaries to repay inherited IRA RMDs.  If you inherited an IRA from anyone OTHER THAN your spouse AND you have taken a 2020 RMD, you may repay the distribution to preserve your principal and reduce your 2020 taxable income.

It should be noted that rollovers may ONLY be made for amounts that would have been 2020 RMDs.  Any distributions OTHER THAN RMDs are not eligible for rollover treatment and are still subject to the once-a-year rule.

All eligible RMD repayments will be treated as non-taxable rollovers in 2020.

If you have any questions or would like to discuss your unique situation, please contact your Atlas Wealth Management Advisor at 1-800-432-7447. 

[1] https://www.irs.gov/pub/irs-drop/n-20-51.pdf