RMD Changes (Qualified Charitable Distribution + FAQ's)
Click Here to Select Your Login

CARES Act Waives 2020 RMD | FAQ’s

By
Updated July 1, 2020

Trust Point

We are proud of Trust Point’s century of service reputation of excellence. But, our approach and purpose has always been focused on the future. Not just our own company’s future - but, more importantly, our client’s futures.

In response to the COVID-19 pandemic, Congress passed the CORONAVIRUS AID, RELIEF, AND ECONOMIC SECURITY Act (CARES Act) to help mitigate the financial impact on businesses, workers, and consumers. The CARES Act has made RMD changes and created provisions that allow for Required Minimum Distribution (RMD) from IRAs to be waived for 2020.

RMD Changes Frequently Asked Questions

What if I have already taken my 2020 RMD?

It may be possible to repay, or rollover, an IRA distribution received in 2020.  An IRA distribution, including an RMD, is eligible to rollover to an IRA or eligible retirement plan.  Generally, rollovers of must occur within 60-days of the distribution, rollovers do not apply to inherited IRA distributions and taxpayers are limited to one 60-day rollover per 12-month period.  On June 23, 2020, the IRS issued Notice 2020-51 in response to COVID-19 with additional guidance on the rollover of IRA RMDs.  The period to complete a rollover of RMDs received in 2020 has been extended to August 31, 2020 and now also applies to RMDs from inherited IRAs.

Also, taxpayers will be able to repay, or rollover, multiple 2020 RMDs as the repayment will not be considered a rollover for purposes of the one rollover per 12-month period limitation.  Individuals who received IRA RMDs earlier in 2020 (January through June) now have until August 31, 2020 to complete the rollover or repayment.  IRA distributions received in July 2020 and later have 60-days to complete the rollover.

What if I received my 2020 RMD and I am unable to repay it by August 31, 2020?

You may still be able to re-contribute the distribution (rollover) if you can demonstrate a coronavirus impact as defined in the CARES Act. Broadly speaking, it’s an “impact” if you, a spouse, or somebody in your household got the virus, or if the virus negatively affected you financially (such as making you unable to work or getting laid off).

If impacted, you may be able to treat the amount distributed as a coronavirus-related distribution and re-contribute, by rollover, the amount over the next 3 years and not have the distribution included in taxable income. This option is not available to a beneficiary of an inherited IRA.

I’ve already done a rollover within the previous 12-month period, do I have any other options?

If the 2020 IRA RMD repayment is made no later than August 31, 2020, it is not subject to the one rollover per 12-month period limitation.

What should I do if I want to waive taking my 2020 RMD?

Please contact your Relationship Manager at Trust Point.

Are distributions from my IRA allowable if I waive taking my 2020 RMD?

Yes, you may still take distributions from your IRA to cover living or unexpected expenses.

Are qualified charitable distributions (QCDs) still allowed in 2020?

Yes, although RMDs have been suspended, QCDs are still in place. The QCD allows an IRA holder, age 70 ½ or older, to make a distribution to qualified charities in total of up to $100,000 per year. The distribution is not included in your taxable income, nor may the distribution be used as an itemized deduction.

Qualified charities for QCD purposes do not include private foundations, donor advised funds, or supporting organizations. QCDs from an Inherited IRA are allowed only if the beneficiary has attained age 70 ½ before the distribution is made.

I attained age 70 ½ in 2019 and I deferred my first year RMD to 2020 – am I allowed to waive my 2019 RMD in addition to my 2020 RMD?

Yes.

I am a beneficiary of an inherited IRA subject to RMDs, is my 2020 RMD waived?

Yes, all RMDs are waived for 2020.  If you are a beneficiary of an inherited IRA and received 2020 distributions, you are also eligible to rollover, or repay, those distributions by August 31, 2020.

I am a beneficiary of an inherited IRA subject to the 5-year payout period, does the CARES Act RMD provision apply to my situation?

Yes. In instances where the 5-year rule applies, the period is extended by one year, if 2020 is part of the 5 years. As a result, if the IRA owner passed in 2015, the IRA must be fully distributed by December 31, 2021; if the owner passed in 2016, the IRA must be fully distributed by December 31, 2022, etc

 

With all options and opportunities, we ask that you please consult with your tax advisor prior to taking any action.

Should you have any questions or would like to discuss any of these options further, please contact your Relationship Manager at Trust Point. Thank you for your business!

 

To view the full PDF click here: CARES Act RMD

Updated: 07/01/2020

Share This Post

Trust Point

We are proud of Trust Point’s century of service reputation of excellence. But, our approach and purpose has always been focused on the future. Not just our own company’s future - but, more importantly, our client’s futures.