Example 1: Jim took a non-RMD distribution from his IRA in February to buy a house. His plan was to replace (rollover) those dollars when his old house sold in March. But the closing was delayed, and Jim missed the 60-day rollover window. Fortunately for Jim, under Notice 2020-23, he was able to take advantage of the extended rollover period. When his old house did eventually sell, Jim replaced the IRA dollars via a rollover before July 15.
But these advantages are no longer available for non-RMD withdrawals. New guidance from the IRS in Notice 2020-51 extended the rollover deadline to August 31. However, this extension is for required minimum distributions only. Since RMDs are waived for 2020, those who took an RMD anytime in 2020 can now put everything back by August 31. Since the one-per-year rollover rule is also waived, those who took multiple RMD payments now qualify. Non-spouse beneficiaries are also eligible for this rollover relief. (Keep in mind that rollovers of RMDs that would otherwise violate the one-per-year rule or are made by non-spouse beneficiaries only qualify for Notice 2020-51 relief if they are returned to the same IRA from which they were taken.)
Going forward, any eligible rollover distributions, including 2020 RMDs, have the usual 60 days to be rolled over. Unwanted 2020 RMDs can still be rolled over after August 31, but relief from the once-per-year rule will be lost. In addition, non-spouse beneficiaries who miss the August 31 deadline will not be allowed to roll the distribution back.
Example 2: Margaret is 45. She did not know that RMDs were waived for 2020 and takes what she thought was her required amount from her non-spouse inherited IRA in late July. If she wants to roll the distribution back, it must be returned to the same inherited IRA, and it must be returned by August 31.
Example 3: Tonya is 30. She takes a non-RMD distribution from her IRA in July and another in August. Tonya has 60 days from the date of either distribution to roll one of these withdrawals over if she chooses. The other is bound by the one-rollover-per-year rule and cannot be returned. Since neither distribution was an RMD, she gets no benefit from Notice 2020-51.
I am an Ed Slott Master Elite trained IRA Specialist and I would like to help you. If you have any questions regarding this article or would like to schedule a complimentary consultation please call my office at 845-627-8300. My Client Service Coordinator Christina will be happy to set up a convenient time so I can help.Warm Regards,
Beth Blecker CEO
Eastern Planning Inc.
Follow Beth Blecker on Twitter: @EasternPlanning
“Ed Slott’s Elite IRA Advisor Group” is solely an indication that the financial advisor has attended training provided by Ed Slott and Company. Ed Slott is not affiliated with Royal Alliance Associates, Inc. Securities and advisory services offered through Royal Alliance Associates, Inc. (RAA), member FINRA/SIPC. RAA is separately owned and other entities and/or marketing names, products or services referenced here are independent of RAA. Reprinted from The Slott Report, 7/20/2020, with permission. Ed Slott and Company, LLC takes no responsibility for the current accuracy of this article. Copyright © 2019 Ed Slott and Company, LLC.