What You Need to Know
The Coronavirus Aid, Relief, and Economic Security Act (CARES Act), signed into law on March 27, 2020, includes provisions that temporarily relax several key retirement account rules. One of these provisions is a waiver of required minimum distributions (RMDs) in 2020. These provisions were further modified on June 23, 2020, to your benefit and we want to summarize what this means to you so together, we can make a decision as to how you should proceed.
Below is a high-level summary of the recent provision changes and how they apply if you have taken all or a portion of your 2020 RMD so far this year and you would like to roll back all or a portion of those distributions to reduce your tax liability.
|Original Provision||Modified Provisions|
|Deadline for Rollovers Original Provision||July 15, 2020||Extended to August 31, 2020|
|Eligible RMD Waivers||RMDs taken from a Traditional/Rollover IRA or workplace defined contribution plan (i.e., 401(k), 403(b)). This includes an Annuity that is an IRA.||Also includes RMDs taken from Inherited IRAs (also known as BDA IRAs).|
|Eligible RMD Distributions||Any one distribution taken between February 1, 2020 – May 15, 2020 that is equal to or less than your RMD.||The total of all distributions taken from January 1, 2020 through July 2, 2020 that are equal to or less than your RMD.|
|Modified 60-Day Rollover Rule||Roll back one distribution before July 15, 2020 regardless if more than 60 days since you took your RMD||Roll back multiple distributions before August 31, 2020 regardless if more than 60 days since you took your RMD|
|Max Amount Eligible for Rollover||Equal to or less than your cumulative 2020 RMD||Equal to or less than your cumulative 2020 RMD|
As an example: Within the confines of this provision, if your cumulative RMD is $10,000 and year to date 2020 you have taken $10,000 in total distributions (tax withholding aside, whether lump sum or systematic plan), you may roll back 100% of your gross distribution(s) before August 31, 2020. If, however, you took $12,000 in total distributions in 2020, you may only roll back a portion or $10,000 of that total which is equal to but not greater than your RMD. Subsequently, if we already assisted you in requesting a 60-day rollover to return a portion of your RMD this year, you are now eligible to request an additional rollover up to your RMD amount.
As always, we are here to discuss all your options but also recommend that you speak to your CPA for guidance. If you feel any of the below may apply to you, please reach out to our office at 941-365-3745. The deadline is quickly approaching!
240 South Pineapple Avenue, Suite 200
Sarasota, Florida 34236
Telephone (941) 365-3745
Toll Free (800) 926-5237
Advisory Services offered through Allegiant Private Advisors, LLC, a Registered Investment Adviser