Denise Appleby: IRA Digest Sept-Oct 2020
- Date: September 11, 2020
IRA Digest: Sept-Oct 2020
New Guidance Expands Eligibility for Non-RMD Rollovers. Action Must Be Taken by August 31, 2020, to Avoid Unnecessary Taxes!
by Denise Appleby, CISP, CRC, CRPS, CRSP, APA
The IRA DigestRetirement Account Strategies and Tips Sept – Oct 2020 Notice 2020-51: New Guidance Expands Eligibility for Non-RMD Rollovers. Action Must Be Taken by August 31, 2020, to Avoid Unnecessary Taxes!By: Denise Appleby, MJ, CISP, CRC, CRPS, CRSP, APA The CARES Act waived RMDs for 2020. But the waiver came too late for some RMD eligible taxpayers, leaving them holding the RMD-bag, so to speak. The IRS came to the recuse of those individuals by providing some creative solutions in IRS Notice 2020-51. Eligible individuals must act by August 31 to take advantage of these solutions. The Coronavirus Aid, Relief, and Economic Security (CARES) Act- signed into law on March 27, 2020- waived required minimum distributions (RMDs) that were due to be taken from IRAs and defined contribution plans in 2020. This waiver means that individuals who would have otherwise been required to take RMDs in 2020 no longer have to, and those who already took those distributions may now roll over those amounts. But many of these individuals were unable to roll over these non-RMDs for various reasons. To provide relief for these individuals, the IRS issued Notice 2020-51, in which they made exceptions to the rules that prevented them from legally completing these rollovers. The following are some of these exceptions: Extending the 60-day Rollover Deadline to August 31, 2020 An individual who takes a distribution from a retirement account must include the amount in income unless that amount is properly rolled over. One requirement that must be met for a rollover to be ‘proper’ is rolling over the amount within 60 days of receipt. The IRS has the authority to waive the 60-day deadline under certain circumstances. That authority was used to waive the deadline for any 2020 non-RMDs, for which the 60-day deadline ended August 30, 2020, or earlier. Under this waiver, those non-RMD amounts may be rolled over by August 31, 2020. This applies to RMDs from IRAs and defined contribution plans- including 401(k) plans, profit-sharing plans, 403(b) plans, 403(a) plans, and governmental 457(b) plans. Waiving the One-Per-12-Month-Period Limitation on IRA-to-IRA Rollovers An individual who takes a distribution from an IRA and rolls over that distribution (or a portion of it) to the same type of IRA is deemed to have performed an IRA-to-IRA rollover. The following would be considered IRA-to-IRA rollovers:
©Copyright 2020: Appleby Retirement Consulting Inc. Grayson, GA. Provided for educational and general informational purposes. Cannot be used as tax or legal advice. For professional use only. |
Nicole Maholtz: 2019 IRA Plan Limits
Profile More