2020 rmd

[jimfrombx]

Forbes has an article dated 3/27 that says RMD's for 2020 will be suspended.
Now that I like, except I already took it in January.

Sorry, didn't see Previous Post on this issue,

[TAX4US]

Can it be put back as though you never took it under some of the new rules?

[ATSMAN]

I thought I saw some language in the bill that RMD for 2020 can be re deposited.

[RWG1950]

I've read that RMD's taken prior to 3-27-20 (but made after 12-31-19) can be reversed. The procedure for this may vary among retirement account custodians and it is
quite likely that many of the front line people in these institutions are not even aware that the new CARES legislation allows for this, but the info will be disseminated shortly.
I wonder how the withholding made on such RMD's will be handled ?
Stay safe folks.

[Burke]

I've read that RMD's taken prior to 3-27-20 (but made after 12-31-19) can be reversed. The procedure for this may vary among retirement account custodians and it is
quite likely that many of the front line people in these institutions are not even aware that the new CARES legislation allows for this, but the info will be disseminated shortly.
I wonder how the withholding made on such RMD's will be handled ?
Stay safe folks.

Good question on the withholding. I would think they would have to pay back 100% of gross RMD and leave the withholding credited to 2020 to be accounted for next year. Sort of like the rollover rules when taxes are taken out. And is there a time frame -- like 60 days from 3/27/20?

[jeancpa]

I thought I saw some language in the bill that RMD for 2020 can be re deposited.

Per a Morningstar article I saw, it can be redeposited into an IRA within 90 days of the distribution.

[Burke]

Do we have the law yet to review? Merrill Lynch sent out information saying 60 days........likewise UBS, and others. It also appears the only-1-rollover-per-year rule is still in effect, so if you had more than one distribution, only one will qualify.

[Burke]

Well, for sure, don't take any more unless you need to. They may allow all withdrawals prior to 3/27 to be rolled over when all is said and done. Who knows? But for sure, any amount withheld for income taxes will have to be replaced if they are rolled over.

[RWG1950]

The current marginal tax rates are pretty low by historic standards. A lot of people have dropped down into the 12% rate.
These IRA bucks are going to be taxed to someone at some point & possibly at a higher future rate.
For a good number of our customers it might be best to just keep the income, pay the tax & be done with it.

[Burke]

The current marginal tax rates are pretty low by historic standards. A lot of people have dropped down into the 12% rate..

I wish. When you factor in Social Security it multiplies exponentially. I still have a hard time convincing one of my clients to do QCD's. It costs him every year.

[RWG1950]

Burke : You are right about the exponential multiplication - for many taxpayers.
My comment was directed more at retirees over age 65 (MFJ) in the 12% marginal bracket that are already paying tax on the maximum of 85% of their social security income.
As I understand this, a retired couple over age 65 having Gross Income of $ 107,650 ( minus $ 27,400) are at 12% federal and are already at the 85% max on social security.
If the $ 107,250 includes $10K of IRA RMD income, wouldn't it be the same 12% either way, whether they took the RMD or not ?
Thanks for your comment.

[New York Enrolled Agent]

Well, for sure, don't take any more unless you need to. They may allow all withdrawals prior to 3/27 to be rolled over when all is said and done. Who knows? But for sure, any amount withheld for income taxes will have to be replaced if they are rolled over.

This is what the ACT says:

(b) ELIGIBLE ROLLOVER DISTRIBUTIONS.—Section 402(c)(4) of the Internal Revenue Code of 1986 is amended by striking ‘‘2009’’ each place it appears in the last sentence and inserting ‘‘2020’’.

[RWG1950]

Burke : Went back and re-checked the math. Seems my comment on the 12% & 85% was not accurate.
The software seems to say someone can be at the 12% maximum for ordinary income and still not be quite at the full 85% for taxable social security.
You had it right.