Correction to June 2020 Advisor Newsletter

In our efforts to quickly provide you with information about new legislation (the CARES Act and its impact on the new SECURE Act), we incorrectly stated the RMD rollover rule in our last newsletter in the section addressing required minimum distributions as follows: “Although those who have already taken an RMD for 2020 are not allowed to repay it into their retirement plan, they are permitted to roll it over into a new IRA within 60 days of the distribution, allowing them to avoid paying income tax on the RMD.”

Here is the rule correctly stated, with some additional explanation:

Under the previous tax law, an RMD taken by an account owner cannot be rolled back into an IRA unless this is done within 60 days after the distribution, and a rollover from one IRA to another IRA (or from one Roth IRA to another Roth IRA) can be done only one time per year (365 days). Under the CARES Act, those who had already taken an RMD prior to the passage of the new law are allowed to roll it over into the original account within 60 days, and this time limit was extended by IRS Notice 2020-23 for distributions—including RMDs—taken between February 1st and May 15th if the rollover occurs by July 15th. If the account owner took an RMD in January, it may not be returned unless the IRS provides additional relief.

Although the once-per-year IRA rollover rule is still in effect, if the account owner has already used their IRA rollover, they are permitted to do a rollover to a non-IRA retirement account such as a 401(k). The once-per-year rule does not apply to RMDs taken from a 401(k) or to Roth conversions.

Our sincerest apologies for the misstatement of the new, temporary rule.