I’m From the IRS, And I’m Here To Help. No Really!

As part of an extraordinary effort by the Government to nurse us through the pandemic, the IRS has further relaxed rules on Required Minimum Distributions (RMD) for IRAs, 401(k)s or any other defined contribution plan.

More than just a very few people don’t need and don’t want the forced distribution from their retirement accounts. For those people, it’s especially annoying to liquidate assets that have depreciated in value in order to fund the RMD. That’s because RMDs are calculated on the account balance as of December 31 of the previous year, and a distribution from a diminished account would have been proportionally larger than if the account value had held steady or increased in value.

Under the CARES Act, RMDs were suspended for 2020, but somehow folks that took distributions in January were excluded from the provision that allowed them to repay the distribution without penalty.

Now, The IRS specifically includes those people that took early distributions and extends the allowable time period for repayment until August 31.*

Now, anyone that took an RMD in 2020 and wishes to repay it has until August 31 to do so. Note that RMDs are still required for defined benefit plans.

If you would like to repay your RMD, consult your financial professional to insure that the repayment is properly documented.

*Pursuant to Notice 2020-51

By | 2020-06-25T19:14:50+00:00 June 25th, 2020|Blog|

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