COVID-19, the CARES Act, and Your 2020 RMD — Part 3

I hope all of my readers continue to be well.

Coronavirus Aid, Relief, And Economic Security Act Badges: Pile of CARES Act Buttons With US Flag, 3d illustrationIn my May 1 posting, I wrote about how the CARES Act waives required minimum distributions from retirement accounts for 2020, and, if you’ve already taken a distribution this year, that you can return it under certain circumstances. However, I also pointed out that you could return your required minimum distribution only if (1) you were the plan participant or a spousal beneficiary and (2) you took the distribution after January 31, 2020.

That has changed! The IRS issued Notice 2020-51 on June 23, saying that required minimum distributions are not required to be taken in 2020, even if the distribution is taken by a nonspouse beneficiary (i.e., from an inherited retirement account). Additionally, there is no longer a requirement that the distribution be taken after January 31, 2020. Finally, if you did take a distribution in 2020 and you don’t want it and don’t want to pay taxes on it, you have until August 31, 2020 to return the distribution to the retirement plan.

I hope this is helpful to you. Please take care and stay safe.

Very truly yours,

Jan Copley

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