2020 CARES Act Required Minimum Distribution Waiver

As we kick off the New Year, it’s a good time to be reminded that the waiver of Required Minimum Distributions (RMDs) expired on Dec. 31, 2020, and you will need to return to taking your RMD in 2021. Here are a few additional rules for the 2020 waiver that were provided by the IRS in a Dec. 23, 2020 Employee Plan Newsletter:

  • The CARES Act waived RMDs for IRAs and defined contribution plans. This applies to beneficiaries with inherited accounts as well. The waiver applied to all RMDs, and you did not have to have been financially impacted by coronavirus to skip your RMD.
  • If a distribution of an RMD was taken between Jan. 1, 2020 and July 2, 2020, then the distribution could have been rolled over by Aug. 31, 2020. RMDs taken after July 2, 2020 needed to be rolled over within 60 days of the distribution.
  • An important idea from the newsletter suggested that if you received an RMD and did not roll it over, you may classify it as a coronavirus-related distribution (CRD) if you are eligible for a CRD. This would allow you to repay the distribution over a three-year period. More important, it would also allow you to spread the reporting of the income over three years rather than reporting it all as 2020 income. If the RMD was from an inherited IRA, the income can be spread over three years, but the withdrawal will not be eligible for repayment over three years.
  • Finally, if you were using substantially equal periodic payments to avoid the 10% penalty prior to age 59 ½, you must complete your 2020 payment or risk having that payment (and all prior payments) subjected to the 10% penalty.

Multnomah Group is a registered investment adviser, registered with the Securities and Exchange Commission. Any information contained herein or on Multnomah Group’s website is provided for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and, unless otherwise stated, are not guaranteed. Multnomah Group does not provide legal or tax advice.

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