The Coronavirus Aid, Relief & Economic Security Act (CARES Act), passed in early 2020, included provisions that applied to IRAs. Recently the IRS, in Notice 2020-51 dated June 23, 2020, answered questions on some of the provisions in the act and provided additional relief. The following points regarding IRAs were addressed in the Notice. Specifically, the IRS:
- Extended the deadline for rolling back IRA distributions taken in 2020. This means that if you took a required minimum distribution (RMD) from certain retirement accounts, you have the opportunity to roll those funds back into a retirement account, due to the waiving of the 2020 RMD under the CARES Act. The 60-day rollover period has been extended to August 31, 2020.
- For the owner of the IRA, that distribution can be rolled back into any IRA that they own, not just the distributing IRA.
- Previously, Inherited IRA beneficiaries who took an RMD in 2020 were not allowed to roll the funds back into the distributing IRA. Under this Notice, Inherited IRAs beneficiaries can now “repay” (rollover) the life expectancy payments (RMD) back into the distributing IRA by August 31, 2020. The repayment is not subject to the one rollover per 12-month period limitation and the restriction on rollovers for inherited IRAs.
As a reminder, the CARES Act waived required minimum distributions for 2020. You can take distributions if you choose, but you are not required to do so this year. Some people are choosing to do a Roth IRA conversion with IRA funds this year, some are continuing with qualified charitable distributions, and some are letting the funds accumulate in their IRA. If you want to talk about your options, a Covenant Trust Financial Services Representative is ready to have that conversation. As always, we also recommend you consult your tax preparer for tax advice specific to your situation.
The information provided is general in nature, educational and is not intended as either tax or legal advice. Consult your personal tax and/or legal advisor for specific information. Covenant Trust is incorporated in the State of Illinois and is supervised by the Illinois Department of Financial and Professional Regulation. Covenant Trust accounts are not federally insured by any government agency. Clients may lose principal as a result of investment losses.