CARES Act: RMD Rollovers
If you are an individual over the age of 70 ½ with a retirement plan or are the beneficiary of an inherited IRA, you are likely aware 2020 RMDs have been waived as part of the CARES Act. Defined benefit plans are excluded from this exemption. Those who took RMDs in 2020 had the option to rollover or roll money from one type of retirement account to another within 60 days, by August 31 to avoid paying taxes on the distribution. This was a unique benefit of the CARES Act, as typically RMDs cannot be rolled over. While the rollover relief laws have been amended several times, the final regulation allowed distributions from January 1, 2020, to be rolled over through August 31, 2020, without following the 60-day rule.
Filing Your Taxes
As the tax deadline is approaching, it’s important to provide your CPA with the information on your 2020 RMD if it was processed and on any rollover before the August 31 deadline. Distributions of $10 or more will generate a 1099-R Form, which must be reported to the IRS.
Consult your financial advisor and tax professional to determine what, if any, taxes are owed for your retirement distribution. Please note RMDs are set to resume for the 2021 tax year.