RMD Rules for 2020 Changed with the Corona Virus Bill

Normally, if you are age 72 or over this year, you must take a Required Minimum Distribution (RMD) from your IRA each year.  This same requirement exists if you were required to take an RMD in 2019.  If you don’t take the annual RMD, there is a 50% penalty on the amount you were supposed to withdraw.

The coronavirus bill passed in March 2020 waives all RMDs for 2020.  So regardless of your age, you will not be required to take an RMD on any of your IRAs in 2020.  All RMDs are waived, including those for inherited (beneficiary) IRAs as well as traditional IRAs and 401(k) IRAs, 403(b) IRA and 457(b) IRA plans.

If you already took the 2020 RMD, you have to include it as part of your 2020 income and pay taxes on it.  However, the IRS is allowing it to be reversed if the RMD was taken on or before April 1, 2020.  You have 60-days to return a distribution to an IRA or deposit it in another qualified retirement account without owing taxes on it.

Bottom Line

  • You will not be required to take a Required Minimum Distribution (RMD) on your IRAs in 2020, regardless of your age.
  • The waiver in 2020 applies to all IRAs, including Regular IRAs, Beneficiary IRAs and 401(k), 403(b), and 457(b) IRA & Roth plans. 
  • If you already took an RMD before April 1, 2020, you have 60-days to reverse your decision.

Final Note

These provisions are in the Coronavirus Aid, Relief, and Economic Security bill (CARES).  I’m sure the hundreds of pages in the bill are perfectly clear.  But what department and who is in charge of coming up with such nice names for bills so that they have wonderful sounding acronyms?

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