We hope by now you probably know that the CARES Act, passed in March, enables taxpayers with a required minimum distribution (RMD) due in 2020 to skip the payment this year. But did you know that you can roll your funds back into your retirement account if you have already taken your RMD this year? You can take advantage of this opportunity until August 31, 2020.
This is a good option for anyone who does not need to receive the funds for living expenses because they can avoid paying tax on the distribution and experience additional growth in their retirement fund.
If you had federal or state income tax withheld from your distribution, that amount will have to be returned as well. If not, that will be considered a taxable distribution. Any amounts withheld will be reported on your 2020 tax return as payments towards your tax liability.
The provisions to skip or return your RMD include all taxpayers, including those who turned age 70 ½ in 2019 and would have received their first RMD by April 1, 2020. This also includes taxpayers who receive an RMD from an inherited IRA.
Additional CARES Act Resources:
CARES ACT – Key Personal Tax Provisions
CARES ACT – Unemployment Benefit Changes
CARES ACT – Tax Angles on Beefed Up Unemployment Benefits
CARES ACT – Retirement Plan Changes
CARES ACT – NOLs or Net Operating Losses
CARES ACT – NOLs Rev Proc
CARES ACT – COVID-19 Legislative Updates for Plan Administrators
CARES ACT – Employer Social Security Tax Deposits Deferral