In Notice 2020-51 issued 6/23/2020, the IRS announced an extension of the 60-day rollover period until 8/31/2020.
As you may recall, the CARES Act removed the requirement to take required minimum distributions (“RMDs”) in 2020. Affected plans are IRAs and defined contribution plans (not defined benefit plans). Those subject to the RMD requirement can take a 2020 RMD but are not required to.
The problem is that the CARES Act became law on 3/27/2020, and some had already taken RMDs in the first quarter and it was too late to undo that decision.
First relief. In this Notice, the IRS extends the 60-day rollover period until 8/31/2020 for any 2020 RMD that could have been waived by the CARES Act. Any RMD taken in 2020 from an IRA or defined contribution plan can be returned by 8/31/2020.
Second relief. Further, the 60-day rollover is only allowed once per year, and thus some were not eligible to roll over the 2020 distributions anyway. This relief provides additional relief providing that a rollover of a 2020 RMD is not considered a rollover for the application of the 12-month rule.
Third relief. Recipients of RMDs from inherited IRAs were also affected by the suspension of the RMD rules. But if the beneficiary took an RMD before the CARES Act was enacted, and didn’t realize that the RMD was no longer required for 2020, they are granted the right to return the RMD. This is a new benefit as these beneficiaries never had a rollover right before.
Please contact us if you would like to discuss further.