• George Fotiou

2020 Required Minimum Distributions Relief

We’ve written extensively on the impact of both the SECURE and CARES Acts and the subsequent waiver of 2020 Required Minimum Distributions (RMDs). This waiver has allowed individuals to keep their money in their tax-qualified plans, a respite from the market volatility surrounding COVID-19. We’ve also educated our clients on how to leverage this waiver to their advantage by either creating a ROTH IRA for the year or by using Whole Life Insurance to create a more lasting legacy that will save them and their beneficiaries money and taxation.

Although the CARES Act waived RMDs for 2020, many individuals had already taken their RMD earlier in the year. Despite the initial guidance allowing for a distribution to be rolled back into an IRA within 60 days, many individuals who were unaware missed the grace period. The issue is that many seniors take their RMDs on an automatic basis in early January and were therefore already disqualified from the RMD waiver provided by the CARES Act, signed on March 27th.

The IRS has now corrected this issue and will allow for any RMD to be reversed at any point before August 31st, 2020. The new guidance, Notice 2020-51, states that the funds that were distributed can, depending on the holding company’s rules, be reversed or simply “rolled” into a new IRA somewhere like an insurance company, bank, or brokerage house. This will keep those funds in your account for 2020 as well as reduce your tax burden at the end of the year based on your earned income.

Please contact Olympic Golden Retirements if you have received an RMD for 2020 and would like to have it reversed or rolled into a new plan.

To speak with a specialist, click here.

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This information is designed to provide general information on the subjects covered.  Pursuant to IRS Circular 230, it is not, however, intended to provide specific legal or tax advice and cannot be used to avoid tax penalties or to promote, market, or recommend any tax plan or arrangement.  Please note that Olympic Golden Retirements LLC and its affiliates do not give legal or tax advice. You are encouraged to consult your tax advisor or attorney. Annuity guarantees rely on the financial strength and claims-paying ability of the issuing insurer.  Any comments regarding safe and secure investments, and guaranteed income streams refer only to fixed insurance products. They do not refer, in any way, to securities or investment advisory products. Fixed insurance and annuity product guarantees are subject to the claims-paying ability of the issuing company and are not offered by Olympic Golden Retirements.