For my retired friends
Back on April 2, which was a CRAZY time in the tax world, I wrote a lengthy blog piece on the then COVID-19 relief provisions that were issued at the time. See here for reference. Much of this blog focused on "the more important" provisions, and a one-liner described a little tidbit regarding the fact that required minimum distributions ("RMDs") would be suspended for 2020. I'd like to expand a bit on this, since RMDs are often an important part of a person's current and future cash flow and financial plan.
As a refresher, under normal circumstances, when a person reaches a certain age (was 70 1/2 but now is 72) they are forced to take out a defined minimum amount from certain retirement accounts. These amounts will generally be subject to tax. One of the COVID-19 relief provisions announced was to suspend this requirement for the year 2020.
What if, in the midst of all this Coronavirus hoopla, you already took your 2020 RMD? The rules state that you can return the funds to your account and it will be treated as if the distribution never happened. There is a deadline for this, however. You have until August 31, 2020 to return the funds, or else it will be treated like any other RMD (taxable).
Most tax deferral qualified retirement accounts are eligible for this, including Traditional IRA, SEP IRA, SIMPLE IRA, 401k, 403b, and other defined CONTRIBUTION plans. Defined benefit plans don't count. Please feel free to call me to chat if you may be impacted by this.