Reversing 2020 IRA RMD — IMPORTANT!
Took my IRA 2020 RMD 3weeks ago. Since 3/27/20 CARES subsequently waived 2020 RMDs, I want to return 2020 RMD to my brokerage IRA . What needs to be done to “correctly” return 2020 RMD to IRA so it’s not treated as a 2020 distribution? Thank you.
Terry Says
This is such an important question, and I’ve just updated my Stimulus column to reflect this. If you have already — and recently — taken an RMD for 2020 (based on 2019 account values) you have a slim chance to return the money without penalty!
Here’s the law that applies:
The 60-day rollover rule applies to indirect rollovers of all or a portion of the assets in a qualified retirement account, such as an IRA or 401(k). Essentially, once you take a distribution from your account, you’ll owe no interest or penalties if it is redeposited into a qualified retirement account within 60 days.
Contact your plan custodian and inform them that WITHIN 60 DAYS, you are essentially “rolling” that distribution amount back into your account. Ask for a written confirmation. If taxes were withheld, you will not receive them back. But they will be applied to next year’s tax return as a credit against taxes you subsequently owe.
Given the current date, that means you cannot reverse distributions taken in January, but get in under the wire for Feb and March distributions taken within 60 days.
