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IRA Rollovers: New Guidelines Offer Potential Tax Savings Thumbnail

IRA Rollovers: New Guidelines Offer Potential Tax Savings

Alexandra Stewart, CFP

New IRS guidelines allow required minimum distributions (RMD) taken in 2020 to be repaid into distributing IRAs. Repayment must be made no later than Monday, August, 31, 2020. 

For taxpayers who have already taken their RMD in 2020 and can afford to return the money to their account, it could be a nice tax savings depending on individual tax brackets.

For retirees with IRAs: The IRS issued its new RMD guidance on June 23 as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act.  Prior to June 23, the IRS allowed taxpayers to repay RMD taken in February 2020. Now, the new guidance will include RMDs taken in January 2020, as long as it is repaid by August 31.  

For Inherited IRA holders: The original guidance did not provide relief for non-spouse beneficiaries. The updated guidance allows account holders to forego their required distribution for 2020. If you already took your RMD this year, you have until August 31 to roll it back into your account.

In summary, it is no longer required to take RMD in 2020. This allows account holders more time to recover from this year’s market volatility, and offers retirees a tax break on mandatory withdrawals if they can afford to go without taking their distribution this year.

If this applies to you, we have likely reached out to discuss your options, but please give us a call if you have any questions.

If you have family or friends who can benefit from the new IRA guidelines, feel free to share this information with them.  If they have any questions, we are happy to help them.