Correction to June 2020 Client 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: “If you have already taken an RMD for 2020, you are not allowed to repay it into your retirement plan, but you are permitted to roll it over into a new IRA within 60 days of the distribution, allowing you 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 you have taken 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, if you had already taken an RMD prior to the passage of the new law, you 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 you 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 you have already used your IRA rollover, you 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.