Advertisement
Tax Breaks

IRS Provides Additional RMD Relief for Retirees

Some seniors who withdrew money from a retirement account in 2020 before RMDs were suspended for the year can still roll the money back into an IRA.

People who took a required minimum distribution (RMD) in 2020 and want to roll it back into an IRA because of the RMD waiver, a reprieve granted by the CARES Act, may have a little more time to do it. Recent IRS guidance includes an extension until July 15, 2020, to complete time-sensitive actions, such as indirect rollovers of retirement account distributions. But the extension only benefits a select group — those who took a distribution in 2020 between February 1 and May 15 and haven't rolled over any other distribution in the past year.

Advertisement - Article continues below

The quirky timeline is because the guidance wasn't written for retirees who took an RMD early in the year and then couldn't pay it back because they didn't meet the 60-day rule. That rule only allows rollovers within 60 days of taking a distribution (and only one indirect rollover is generally allowed per person per year). The IRS guidance, says IRAhelp.com's Ed Slott, was written for "a laundry list of other time-sensitive deadlines. It was written for the bigger fish, and the smaller fish got caught up in it."

So the extension still doesn't help anyone who took an RMD in January 2020. Slott believes the IRS will eventually provide additional clarification that may help these people roll over their 2020 distributions, just not yet. "If they are going to do something fair, they should come out with blanket relief," he says. And there is still time for that to happen. "The tax on that RMD won't be due until April 15, 2021," says Slott. "The IRS has plenty of time to provide retroactive relief."

Advertisement
Advertisement

Most Popular

11 Dividend-Paying Stocks You Should Think Twice About
dividend stocks

11 Dividend-Paying Stocks You Should Think Twice About

Dividend-paying stocks often can be a store of safety, but 2020 has been difficult on income equities. These 11 picks look like shaky plays despite th…
September 21, 2020
Medicare Basics: 11 Things You Need to Know
Medicare

Medicare Basics: 11 Things You Need to Know

There's Medicare Part A, Part B, Part D, medigap plans, Medicare Advantage plans and so on. We sort out the confusion about signing up for Medicare --…
September 16, 2020
Where You Should Invest Now
investing

Where You Should Invest Now

Kiplinger.com senior investing editor Kyle Woodley joins our Your Money's Worth podcast to answer investor questions about tech stocks, the election a…
September 22, 2020

Recommended

HSA Limits and Minimums
health savings accounts

HSA Limits and Minimums

Annually adjusted contribution limits and other requirements must be met if you're covering health care costs with a Health Savings Account.
September 21, 2020
Don’t Be Paralyzed by Uncertainty
retirement planning

Don’t Be Paralyzed by Uncertainty

You definitely need a plan, because what’s ahead could be scarier than what’s behind us.
September 21, 2020
Insurance for Long-Term Care at Home
retirement

Insurance for Long-Term Care at Home

In the wake of COVID-wracked nursing homes, increasingly more people are looking at options to age in place with long-term care insurance.
September 17, 2020
Medicare Basics: 11 Things You Need to Know
Medicare

Medicare Basics: 11 Things You Need to Know

There's Medicare Part A, Part B, Part D, medigap plans, Medicare Advantage plans and so on. We sort out the confusion about signing up for Medicare --…
September 16, 2020