One of the significant provisions of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), which became law last week, is the waiver of any required minimum distributions (RMDs) from individual account retirement plans and IRAs for tax year 2020.

Individual account retirement plans include 401(k), profit sharing, 403(b) and state-sponsored 457(b) plans. The waiver of the RMD requirement does not apply to benefits payable from a defined benefit plan; such benefits are typically paid in the form of a lifetime annuity.

The CARES Act waiver means that individuals who have attained age 70½ in 2019 or before, or who have attained age 72 in 2020, are not required to withdraw their RMDs from retirement plans or IRAs in 2020.

The waiver also applies to individuals who first attained age 70½ in 2019 and delayed taking the first RMD until 2020 (which, under normal circumstances, must be withdrawn by April 1, 2020).

Finally, the waiver also applies to individuals who have an RMD requirement for 2020 and are beneficiaries:

• Under an inherited IRA or

• Of a deceased participant who had an account in a retirement plan.

If the beneficiary is required to take all distributions from the plan or IRA within five calendar years following the death of the participant in the retirement plan or the IRA account holder, the 2020 year does not count in determining the five-year period.

Chuck Whetstine is a shareholder in the Whetstine Law Firm and of counsel to Frazer Ryan Goldberg & Arnold LLP.

RMD Rollbacks

If an individual has already withdrawn his or her RMD for 2020 or has withdrawn the first year’s 2019 RMD in 2020, the withdrawn amount may be rolled back to (a) the retirement plan (if the plan accepts rollbacks) or (b) an IRA, within 60 days from the date of withdrawal. If the distribution is rolled back to a retirement plan or IRA, the distribution will not be taxable in 2020.

This rollback rule does not apply to 2020 RMDs received by a beneficiary:

• Under an inherited IRA or

• Of a deceased participant in a retirement plan.

If a beneficiary receives an RMD during 2020, the amount cannot be rolled back.

If you are considering rolling an RMD from an IRA back to the IRA from which you received the distribution or to any other IRA you may have, there is one catch: You can make only one tax-free rollback of an IRA distribution received during any one-year period. Unless the IRS waives this one-year limitation, you cannot make your one IRA rollover in 2020 if you (a) had received another distribution from an IRA within the preceding one-year period and (b) made a tax-free rollover of that distribution to an IRA. This one-year limitation does not apply to an IRA distribution that is rolled back tax-free to any other type of retirement plan that accepts rollovers.

For example, if you are taking RMDs and withdrew all or any portion of your 2020 RMD on February 15, 2020, you will have until April 15, 2020, to roll back all or any portion of the RMD to an IRA or to a retirement plan that will accept the rollback. However, if you received the distribution on February 15, 2020, from an IRA, you cannot roll the 2020 distribution back to an IRA if you received any other distribution from an IRA (not necessarily the same IRA) on or after February 15, 2019, and had made a tax-free rollback of that prior distribution to an IRA.

As another example, if you attained age 70½ anytime during 2019 and did not withdraw your 2019 RMD until March 2, 2020, then that withdrawn RMD is also eligible for tax-free rollback until May 1, 2020. However, if you withdrew all or any portion of your RMD in calendar year 2019, rather than waiting until April 1, 2020, to take your first RMD, then the 2019 distribution is not eligible for rollback.

There is a chance that the IRS may extend the rollback period of an RMD received in 2020 as it did when RMDs were waived in 2009 during the Great Recession. If you have taken an RMD in 2020 and are within 60 days of the date of withdrawal, you should not count on the IRS extending the 60-day period, and you should immediately make a tax-free rollback of the RMD within the 60-day window if you want to avoid income taxes on the distribution in 2020. As noted above, if you are already outside the 60-day window and still want to make a rollback, you should watch for any reports that the IRS has extended the 60-day window.


Chuck Whetstine is a shareholder in the Whetstine Law Firm and of counsel to Frazer Ryan Goldberg & Arnold LLP.