How the CARES Act impacts your 2020 RMDs


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Key Points

  • Required minimum distributions are waived for most retirement accounts this year.
  • Familiarize yourself with the change by reviewing answers to frequently asked questions.
  • Your advisor is committed to helping you navigate the tax and estate planning aspects with other professionals in these areas.

The CARES Act stimulus package has suspended 2020 required minimum distributions (RMDs) across retirement accounts, including 401(k), IRA, 403(b) and 457(b) accounts.

To help you navigate the tax and estate planning aspects of the change, we’ve compiled answers to the questions our advisors are receiving. Your Ameriprise advisor is committed to supporting you with personalized advice.

What are the criteria to waive RMDs this year?
The RMD waiver applies to everyone with a 401(k), IRA, 403(b) or 457(b) account. Defined benefit pension plans are not eligible.

I’ve already taken my RMD for 2020. What can I do?
As of June 23, anyone who already took a required minimum distribution (RMD) from their IRA in 2020 now has the opportunity to roll those funds back into the distributing IRA. The 60-day rollover period and “one IRA to IRA rollover per 12 month rule” don’t apply as long as the rollover is completed by August 31, 2020. The guidance also allows for RMDs from inherited IRAs to be rolled back into the distributing inherited IRA. 

Is there a special procedure to roll over the amount that would have been my RMD?
You only need to indicate that the payment is a rollover. 

I opted to have federal and/or state taxes withheld from my RMDs. Can I roll the tax withholding back in?
Amounts withheld cannot be reversed. However, you can use your own funds to roll over the equivalent amount of taxes withheld. You would then claim that amount when you file your 2020 tax return next year. The full amount of the distribution, including the tax withholding, must be rolled over to avoid taxes.

I inherited an IRA. Do I have to take my RMD for 2020?
Owners of inherited IRAs may suspend RMDs for 2020. 

I’ve already distributed the 2020 RMD from my inherited IRA. Am I able to roll it over?

Yes- the guidance under IRS Notice 2020-51 allows inherited IRA RMDs to be rolled back to the distributing IRA by August 31.

 

Do I have to roll the funds back into the same plan the RMD came from?
If you are relying on the relief provided in IRS Notice 2020-51, the RMD must be rolled to the distributing IRA by August 31. 

We’re here to help

Your Ameriprise advisor can help you understand what the CARES Act means for you and provide personalized advice to adjust your retirement income plans.