On March 27, Congress waived the required minimum distribution (RMD) requirement for this 2020 tax year. Since then, it seems like every few days I discover more options for seniors who want to reverse their distributions.
So far, I’ve written articles about how seniors can reverse their RMD using 60-day rollover contributions, which likely means making Roth conversions for most people, and how both seniors and heirs can reverse their RMD using a Coronavirus-Related Distribution if they either had COVID-19 or qualify as having experienced adverse financial consequences as a result of a specific list of COVID-19 legislation.
Now, it turns out that on April 9th the IRS also indirectly extended the 60-day rollover contribution deadline until July 15, 2020.
In IRS Notice 2020-23, the IRS extended several tax deadlines. Among those, the notice declares (emphasis added):
The Secretary of the Treasury has also determined that any person performing a time-sensitive action listed in either §301.7508A-1(c)(1)(iv) –(vi) of the Procedure and Administration Regulations or Revenue Procedure 2018-58, 2018-50 IRB 990 (December 10, 2018), which is due to be performed on or after April 1, 2020, and before July 15, 2020 (Specified Time-Sensitive Action), is an Affected Taxpayer.
…Affected Taxpayers also have until July 15, 2020, to perform all Specified Time-Sensitive Actions, that are due to be performed on or after April 1, 2020, and before July 15, 2020.
Revenue Procedure 2018-58, 2018-50 IRB 990 (December 10, 2018) is a document that lists various accounting methods and periods that have deadlines. This 2020 IRS notice says that actions listed in that 2018 document are included in the “specified time-sensitive actions” which have their deadlines extended in this notice.
Included in that 2018 revenue procedure list as number 23 is:
An eligible rollover distribution may be rolled over to an eligible retirement plan, including an IRA, no later than the 60th day following the day the distributee received the distributed property.
Because the 60-day rollover contribution deadline is included in that 2018 list, it makes 60-day rollover contributions a specified time-sensitive action whose deadline is now extended for tax year 2020.
In this way, the April 9th IRS notice indirectly extends the 60-day IRA rollover deadline for rollover contributions that were due to complete after April 1, 2020 and before July 15, 2020 to being due on July 15, 2020.
This means that distributions made after February 1, 2020 which would have been due to complete 60 days later on April 1, 2020 are now due back into a qualified retirement account before July 15, 2020.
It is important to note that you are still only permitted one IRA-to-IRA or Roth-to-Roth rollover contribution per 12-month period. In this way, if you have taken more than one distribution from your IRA, you may benefit from completing Roth conversion rollover contributions by redistributing those traditional distributions into a Roth IRA. You can read more about this in the article, “If You Act Fast, You Can Undo Your 2020 RMD Thanks to the CARES Act.”
If the distributions you are trying to reverse are from an inherited IRA or if you received the distributions in January 2020, your main option for redistribution is still the Coronavirus-Related Distribution, if you qualify.
Hopefully, this extension helps some take advantage of this welcome relief.
Photo by Mike Kenneally on Unsplash