Guidance on the waiver of 2020 required minimum distributions gives relief – with a deadline of Aug. 31, 2020

Blog Post

On June 23, the IRS and the Treasury Department issued new guidance (Notice 2020-51) that allows more people to roll a distribution (that they thought was a minimum required distribution) back into the plan or an IRA. Follow this link to read our alert on the topic of the suspension of required minimum distributions (RMDs) in 2020.  

Many people had taken or started taking their 2020 RMDs before the CARES Act became law on March 27. The CARES Act suspended RMDs for 2020 for many plan participants and IRA owners and beneficiaries.[i]  What if you received a distribution before you became aware of this change in the law? Can you put the distribution back into the retirement plan or roll it into an IRA? 

Again, follow the link to the artile listed above to find a general discussion of when distributions can be rolled tax-free back into tax-deferred plans or into IRAs.  As a rule of thumb, this can be done if the rollover occurs in the 60 days following the date that the distribution was received, but there are limitations and other requirements, so check with your tax advisers and plan administrators to be sure that the transfer back into the plan or an IRA will qualify as a tax-free rollover.

  • What if the 60 days expired before you realized that the distribution you received was not required—i.e. was not an RMD?  Is there a way to put that money back into the plan or an IRA?
  • What if you are the beneficiary of an inherited IRA who received such a distribution in 2020? Distributions from inherited IRAs cannot be rolled back into the inherited IRA or into another IRA. Is there any relief for this situation? 
  • What if you have rolled another IRA distribution into an IRA in the last twelve months? The rule is that you can only make one tax-deferred IRA to IRA rollover in any twelve month period. Is there relief for this situation? 
  • What if you have been taking a series of substantially equal periodic payments from your retirement plan that count toward the RMD?  For example, what if you received equal monthly payments from January of 2020 that would have been part of your 2020 required minimum distribution? The rule is that such payments are not eligible rollover distributions.  Is there relief in this situation? 

In April, we said that we were hoping for guidance on these questions that would go beyond the limited relief that was available at that time under the state of emergency declaration.  We are happy to say that help has arrived in the form of Notice 2020-51.

But you need to make the rollover back into the plan or into an IRA by Aug. 31, 2020 to qualify for relief in the situations described, so it is time to call your plan administrator or IRA custodian to plan to get that done by the Aug. 31 deadline.   

Generally, the amount that you can roll back into the plan or IRA under this relief is the amount that would have been all or part of the 2020 RMD, if the 2020 RMD requirement had not been waived under the CARES Act. Note that in the case of 2020 distributions from IRAs that would have been RMDs, the relief available for the situations described above requires the distribution to be repaid to the IRA from which it was distributed.

Notice 2020-51 addresses a number of other circumstances and technical concerns, and it includes guidance for plan administrators and sample plan amendments to incorporate the 2020 RMD waiver. We strongly recommend consulting your tax adviser before transferring money back into a plan or IRA because excess contributions penalties can apply if the rollover is not qualified under the existing rules or the temporary relief offered by Notice 2020-51.


[i] The suspension of RMDs for 2020 does not apply to defined benefit pension plans, and many retirement plans will still require the distributions to be made unless the plans are amended to accommodate this change, so participants should check with their retirement plan administrators to determine whether they can skip the 2020 RMD.

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