Early Bird RMD Doesn't Get The Tax Relief Worm

[RWG1950]

Received an e-mail yesterday from a regional law firm, with the above heading.
They seem to say in this message that (with a few exceptions) the only remedy for "undoing" a 2020 RMD made prior to 3-27-20 is a regular 60 day rollover.
If accurate, this being the first week in April, it would seem such RMD'S made during January and into February would be out of luck.
Haven't seen anything that would contradict this. Seems unfair to not allow the "undoing" all the way back to 1-1-20.

[Burke]

Congress may yet do this. Stay tuned for further developments, its bound to come up.....

[New York Enrolled Agent]

Received an e-mail yesterday from a regional law firm, with the above heading.
They seem to say in this message that (with a few exceptions) the only remedy for "undoing" a 2020 RMD made prior to 3-27-20 is a regular 60 day rollover.
If accurate, this being the first week in April, it would seem such RMD'S made during January and into February would be out of luck.
Haven't seen anything that would contradict this. Seems unfair to not allow the "undoing" all the way back to 1-1-20.

Did you read the contents of the ACT posted in the other thread? Were you doing taxes in 2009? Same plan for 2020 - the legislation says 60 days.

HOWEVER, in 2009 the IRS issued Notice 2009-82 (which I would urge you to read) which gave relief to taxpayers from the legislation. I would be surprised if there was not a similar relief in 2020.

[Rapid Robert]

Were you doing taxes in 2009?

I was, but I don't remember the details. :-)

However, what is beautiful to me is that TheTaxBook WebLibrary has tax year 2009 desktop reference available online! A few clicks took me right to the details as they were explained that year, including a link to the IRS notice. One thing I found in the notice, I think it is what NYEA is referring to:

"Rollover relief for IRAs. In the case of IRA owners who have already
received distributions of 2009 RMDs in 2009, the Service, under the authority of
§ 408(d)(3)(I), is hereby extending the 60-day rollover period for any such
distribution so that it ends no earlier than November 30, 2009. However,
because of the one-rollover-per-year rule in § 408(d)(3), which was unchanged
by WRERA, no more than one distribution from an IRA in 2009 will be eligible for
this rollover relief."

The other thing I saw is that for non-IRA plans (employer plans, etc) there may be plan amendments required.

[TaxGuyBill]

Forgive me if I'm missing something, but I don't get what the big deal is. If you DON'T like taking RMDs, why would you do it in January?

[Burke]

Some retirement plan-owners wish (or need) the monthly distributions of annual RMD's to supplement their regular income. Its easier to budget. If you have to take it anyway, why not monthly -- under normal circumstances. Not everyone has 100% invested in the markets. Others may wish to use withdrawals to pay real estate taxes due earlier in the year, or any other large budget items as they come up.

[Maude Lebowski]

Has anyone dug into the automatic waiver of the 60 day rollover requirement? I'm not saying I have the answer, but I think it's something we can all put our heads together on.

The Code specifically excludes RMDs from being rolled over; however, RMDs are suspended for 2020, so I believe it can be argued that the distribution was not an RMD.

I don't see any blanket reasons that would qualify everyone, but some of the specific reasons could apply to some of our clients:

https://www.irs.gov/retirement-plans/retirement-plans-faqs-relating-to-waivers-of-the-60-day-rollover-requirement

[Burke]

The Code specifically excludes RMDs from being rolled over; however, RMDs are suspended for 2020, so I believe it can be argued that the distribution was not an RMD.
I don't see any blanket reasons that would qualify everyone, but some of the specific reasons could apply to some of our clients:
https://www.irs.gov/retirement-plans...er-requirement

The CARES act specifically states the withdrawals will NOT be considered as RMD's for 2020. I have read the FAQs and most of them are when the financial institution makes an error and other specific personal reasons. In the instance of 2020 automatic suspension of RMD's provided in the law, IRS is going to have to address those prior withdrawals which are over the 60-day period to determine if they can be treated as one withdrawal as of the last date received, and indeed be rolled over this year.

[Maude Lebowski]

most of them are when the financial institution makes an error and other specific personal reasons.

I understand what you're saying Burke and I'm not saying it will work in every situation; however, some of the "specific personal reasons" will fit some folks:

(Apologies about the poor formatting.)

From https://www.irs.gov/pub/irs-drop/rp-16-47.pdf


(2) Reason for missing 60-day deadline. The taxpayer must have missed the 60-day deadline because of the taxpayer’s inability to complete a rollover due to one or more of the following reasons:

(a) an error was committed by the financial institution receiving the contribution or making the distribution to which the contribution relates;

(b) the distribution, having been made in the form of a check, was misplaced and never cashed;

(c) the distribution was deposited into and remained in an account that the taxpayer mistakenly thought was an eligible retirement plan;

(d) the taxpayer’s principal residence was severely damaged;

(e) a member of the taxpayer’s family died;

(f) the taxpayer or a member of the taxpayer’s family was seriously ill;

(g) the taxpayer was incarcerated;(h) restrictions were imposed by a foreign country;

(i) a postal error occurred;

[Burke]

But would any of these change the 1-rollover-per-year-rule?

[New York Enrolled Agent]

But would any of these change the 1-rollover-per-year-rule?

The IRS Notice cited in post #3 addressed that issue. Anything is possible but I suspect the answer will be the same as in the 2009 Notice.