CARES Act: New Considerations For 2020 Required Minimum Distributions

The CARES Act suspended the requirement to make a required minimum distribution (RMD) for defined contribution plans in tax year 2020. Defined contribution plans include IRAs, 401(k) and 403(b) plans.


If 2020 would have been your first RMD year, the distribution is not required to be taken until 2021. The CARES Act also allowed those who were required to take their first RMD for 2019 that had not done so by April 1, 2020 to suspend their RMD.


What are the options for required minimum distributions taken before the CARES Act was enacted?


If the RMD was taken in the last 60 days, you can transfer an amount equal to the RMD back into your retirement account before the end of the 60-day window. If your deadline falls between April 1, and July 14, the rollover deadline is now July 15. For distributions taken on February 1, 2020 or later, the IRS has also extended the rollover deadline to July 15. 


If you choose to refund your RMD and taxes were withheld from your account, there are two options:

  1. You can return the gross amount of the RMD to your plan. When your income tax return is filed in the following year, the withholding will count toward your taxes paid. 
  2. Any amount that is recontributed to your RMD that is less than the gross amount will be treated as a distribution and taxable. For example, if you chose to only repay the amount net of taxes – the cash you received – you will have to count the amount withdrawn and withheld for taxes as income in the following year. 

For those who have already taken an RMD in 2020 that is not within the 60-day window, you may be able to qualify the distribution as a coronavirus hardship distribution. If this is an option, you can recontribute the funds to an eligible retirement plan, (essentially a rollover contribution) within three years. These amounts will not be included in the maximum contribution limits for those years. 


If a beneficiary of an IRA has already taken an RMD, they are not provided a waiver. Beneficiaries cannot make rollovers, so are ineligible to return the money back to the account.


Please do not hesitate to reach out to us if you have questions regarding your specific situation. 

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