RMD RULES FOR 2020 – Updated June 23, 2020

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.

A big issue was for people who took a 2020 RMD distribution and wanted to reverse their decision.  Prior to June 23, 2020, you may or may not have been able to reverse your decision.  It depended on when you took the RMD distribution and how long you waited to return the distribution.

On June 23, 2020, the IRS issued a notice simplifying the RMD rules:

  • All RMDs are waived in 2020, including those for inherited (beneficiary) IRAs as well as traditional IRAs, Roth IRAs, 401(k) IRAs, 403(b) IRA and 457(b) IRA plans.
  • If you already took a 2020 RMD on an IRA, it can be reversed, if done before August 31, 2020.  Very simple.  It doesn’t matter when you took it and you don’t have to return the distribution within 60-days of the distribution.  Just make sure you return it by August 31.

BOTTOM LINE

  • You are not required to take a Required Minimum Distribution (RMD) on your IRAs in 2020, regardless of your age.
  • If you already took a distribution in 2020, you can reverse your decision up until August 31, 2020.

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