Required Minimum Distributions (RMDs) waived in 2020. This includes Traditional, SEP, and SIMPLE IRAs, and employer plans such as 401(k)s, 403(b)s and governmental 457(b)s. 403(b)s and governmental 457(b)s.
If you already took your RMD for 2020 and wish to return those funds to the account to avoid paying tax,
there are two options:
- If the initial distribution was taken within the last 60 days, you may return the funds to the account as a 60-day rollover. You are only allowed one rollover per 365-
day period, so you must not have done a rollover in the prior 365 days and you will not be allowed to do one for the next 365 days.
- If you are already outside of your 60- day window and you are able to meet the definition for a coronavirus-related distribution, you would have three years to return the amount you initially distributed as an RMD. While the definition of this distribution type is very broad, it is not unlimited and not everyone will be able to qualify for it.
Elimination of 10% Additional Tax For Coronavirus-Related Retirement Plan Distributions.
An exception to the 10% distribution penalty is provided by the CARES Act for “coronavirus-related” distributions of up to $100,000 made to a qualified individual for pre-59 ½ distributions from retirement accounts. The distributions may be repaid over three years by redepositing any or all the distribution back into their retirement account.
The funds can be returned as a single contribution or as a series of contributions and must be made over a three-year time frame starting the day after the distribution is taken. A taxpayer can elect to have all the income reported in 2020 or may split it evenly between the 2020, 2021 and 2022 tax years.