IRS Announces 2020 RMD Rollback Permissible

RMD rollback 2020

We’ve been having a lot of conversations with our clients about RMD (Required Minimum Distribution) Rollbacks this year. There is an official new development that may benefit some of our clients that we want to share.

One of the features of the CARES Act put into place earlier this year is eliminating anyone having to take an RMD from their Retirement Account* for the year 2020. This applies to inherited IRAs, Traditional IRAs, 401(k) & 403(b) plans and there are no age limitations. It is excellent news for clients who only take the RMD because they have to but don’t need the funds to live on, as it saves them a year’s worth of taxes on those distributions.

But what if you already took your distribution, or part of it, for the year 2020 and didn’t need the funds? The IRS announced a ruling on June 23rd that anyone who has taken their 2020 distribution but wants to put it back, can do so by August 31st without penalty or incurring additional taxes. We had suspected this was the case, but we were waiting for the official word from the IRS before getting too excited. So now we are pleased to announce this is officially an option.

As always, please consult with your tax advisor for more specifics on your personal situation. And feel free to reach out to your advisor at Fort Pitt for more information, as well.

*Does not apply to defined benefit plans (aka pension plans)

Nathan Boxx, Bradley Newman, Jason Seltzer

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