June 23, 2020

IRS Grants Broad Rollover Relief for Previously Distributed 2020 RMDs

Today the IRS announced its issuance of Notice 2020-51 in news release N-2020-51. In Notice 2020-51, the IRS provides rollover relief for RMDs already received in 2020. There is relief for both retirement plans and IRAs. This notice is devoted to the IRA relief.

This rollover relief is broad; it applies to IRA account holders and to IRA beneficiaries. A recipient of an IRA distribution that occurred earlier in 2020 is authorized to repay such distribution amount to the distributing IRA as long as the rollover repayment occurs by August 31, 2020.

The IRS states that the once per year rule does not apply to such a distribution. This means a person who has received multiple distributions is eligible to rollover all such distributions.

The IRS also states a non-spouse beneficiary is also eligible to make a rollover repayment. This is the first time the IRS has chosen to extend relief to a non-spouse IRA beneficiary.

Therefore, any distribution made from an IRA in 2020 may now be returned to that IRA by August 31, 2020, with no tax implications. So, those clients who missed out on the CARES Act time frame earlier this year can now take advantage of this additional benefit.