IRS PROVIDES ADDITIONAL EXTENSION OF TIME FOR ROLLOVERS OF 2020 REQUIRED MINIMUM DISTRIBUTIONS

On June 23, 2020, the IRS issued Notice 2020-51 that essentially provided additional relief for those who have received a Required Minimum Distribution (RMD) during 2020. When COVID-19 became a pandemic in early March 2020, the IRS extended the tax compliance filing dates for most tax filings until July 15, 2020. This included the 60-day rollover deadline for distributions made for IRAs or qualified plans. When the CARES Act was enacted later in March, all RMDs for 2020 were waived and it allowed any distribution received after January 31, 2020, to be rolled over into an IRA or qualified plan. Normally RMDs cannot be rolled over but because RMDs were waived for 2020 this can now be accomplished. However, this rollover exception rule would not apply for non-spousal beneficiaries. Additionally, anyone who received an RMD in January 2020, was out of luck and unable to roll over the distribution.

Notice 2020-51 provided relief for several issues related to RMDs. First, it extended the deadline for the 60-day rollover until August 31, 2020. Second, it provided this relief for any RMD received in 2020 (thus giving relief for January recipients). Third, the rollovers made during the extended 60-day deadline would not count against the once-per-year rollover rule. Thus allowing individuals that received more than one RMD during the year, such a monthly distribution, to roll over each of the RMDs received. Finally, the IRS also made an exception for non-spouse beneficiaries to repay any distribution received from inherited IRAs. Non-RMD payments received are not covered under Notice 2020-51 and would still be subject to the usual 60-day rollover deadline (or July 15, 2020 deadline if made after January 31, 2020).