Good news for retirees – RMD waiver expanded
August 5, 2020

Anyone who already took a required minimum distribution (RMD) this year from certain retirement accounts now has more time to roll that money back into the savings plan, according to the Internal Revenue Service, which recently announced that the CARES Act RMD waiver has been extended until August 31, 2020.

“The 60-day rollover period for any RMDs already taken this year has been extended…to give taxpayers time to take advantage of this opportunity,” the IRS said.

The announcement means those seniors who took funds from their  traditional IRAs and 401(k) plans before the CARES Act temporarily eliminated the RMDs in March now have more time to put the money back into their accounts.

While retirees have long argued they shouldn’t have to take the RMDs, when the COVID-19 pandemic hit and the stock market suffered losses, seniors were particularly upset, saying they were basically forced to “sell low” during the public health crisis.

With the CARES Act waiver being extended, they are now offered relief from RMDs for 2020. It’s hoped that the extra time will allow the retirement investments to recover some of their lost value.

Until the recently announced extension, those who took their withdrawal between February 1 and May 15 had until July 15 to put the money back and avoid paying taxes on it, according to Kiplinger.  Now, even if the withdrawal was made in January, the IRS will treat the repayment as a tax-free rollover if the funds are deposited back into your retirement savings account by August 15, 2020. And more good news, it won’t be subject to the “one-rollover-every-12-month” rule.

The CARES Act also waives RMDs for non-spouse beneficiaries of inherited IRA’s.

Of course, financial advisors agree, if you need the money, hold onto it. If you don’t, however, you may want to reinvest it in your retirement plan. You’ll have less taxable income in 2020, which can mean less tax on your Social Security, lower Medicare premiums, or, a possible “recovery rebate” credit on your 2020 tax return.

If you have questions about your required minimum distributions, please reach out to one of our tax advisors. We are here to help!


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