Four Weeks to Undo Your RMD

In March, we sent out an alert about the “Coronavirus Aid, Relief, and Economic Security” (“CARES”) Act. Under the CARES Act, for 2020 only, you are exempt from taking the required minimum distribution (RMD) from your 401(k), 403(a) or (b), certain 457(b) plans, IRA or inherited IRA.

If you took a distribution this year, you may be able to repay it or roll it over, but you must act by August 31!

If you took a distribution from your IRA in 2020 that would have been an RMD in the absence of the CARES Act exemption, you may repay the distribution to the IRA from which you took it. Even if you take your RMD in installments, you may pay them all back so long as you do so by August 31, 2020. This repayment option applies only to IRAs.

You may also be able to treat the distribution you took from an IRA or certain qualified plans as a rollover distribution. However, unless you are the surviving spouse, you cannot roll over the distribution if you are a beneficiary of an inherited account. Your only option is to repay the distribution, and the repayment option is only available if the distribution was from an IRA.

If the distribution was a Coronavirus-related Distribution (“CRD”), you may have the option to roll over the distribution for up to three years. CRDs are distributions taken by an individual who is diagnosed with COVID-19, is married to someone or has a dependent who is diagnosed with COVID-19, or experiences adverse financial consequences as a result of the pandemic. Distributions for your registered domestic partner will qualify for this treatment only if your partner is your dependent.

Contact us as soon as possible as if you took a distribution from your retirement plan or IRA this year and wish to undo it. We will help you determine if you qualify for repayment or rollover treatment.