Florida Elder Law & Estate Planning Blog

You now have until August 31 to reverse RMDs taken for 2020

The CARES Act of 2020 allows taxpayers to skip required minimum withdrawals from IRAs, 401k and 403b plans this year.

The law was enacted on March 27, 2020. What about people who took their withdrawal prior to its passage, say, in January? Normally, you have a 60-day window to roll the funds back, and can do only one rollover per 12-month period. That restriction has left many early birds out in the cold, unable to reverse their withdrawals.

The IRS has just issued guidance on this issue, and it’s good news for the early birds: The deadline for reversing an RMD has been extended to August 31, 2020. The funds must be returned to the account they were withdrawn from.

The IRS states as follows:

In the case of an IRA owner or beneficiary who has already received a distribution of an amount that would have been an RMD in 2020 but for section 2203 of the CARES Act or section 114 of the SECURE Act, the recipient may repay the distribution to the distributing IRA, even if the repayment is made more than 60 days after the distribution, provided the repayment is made no later than August 31, 2020.

The repayment will be treated as a rollover for purposes of § 408(d)(3) of the Code, but will not be treated as a rollover for purposes of the one rollover per 12-month period limitation in § 408(d)(3)(B) and the restriction on rollovers for nonspousal beneficiaries in § 408(d)(3)(C). 

Read IRS notice 2020-51 here.