RMDs May Not Be Required for 2020

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Retired1809
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RMDs May Not Be Required for 2020

Post by Retired1809 »

CNBC is reporting that Covid-19 Bailout Legislation being considered will relieve retirees of the burden of taking RMDs in 2020.

https://www.cnbc.com/2020/03/24/congres ... 401ks.html

I want to be clear: this legislation has not been passed. And any final version may not contain this provision. But if you haven't taken your RMD for 2020, you might consider waiting until we learn more.

You're welcome.
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Re: RMDs May Not Be Required for 2020

Post by GoPackGo »

Would this apply to people younger than 72 with inherited IRAs?
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Re: RMDs May Not Be Required for 2020

Post by Silk McCue »

GoPackGo wrote: Tue Mar 24, 2020 6:24 pm Would this apply to people younger than 72 with inherited IRAs?
You will have to wait until any actual legislation is passed.

This thread will likely get locked.

Cheers
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Re: RMDs May Not Be Required for 2020

Post by Alan S. »

If passed, there are several ramifications:

1) Those who use withholding from the RMD in the past to pay taxes may need to switch to quarterly estimates for 2020.
2) Total QCDs will come down with no RMD, but you might still distribute enough to fund QCDs
3) You could still distribute enough to do QCDs plus withholding. You will have the flexibility to distribute any amount you wish
4) While your future RMDs will be higher by not reducing your balance for 2020 RMDs, these higher RMDs will be offset by both a lower balance due to the bear market AND the expected new RMD tables kicking in for 2021.
5) What would have been your RMD could be replaced by conversions in 2020.
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Re: RMDs May Not Be Required for 2020

Post by Gill »

Alan S. wrote: Tue Mar 24, 2020 6:30 pm If passed, there are several ramifications:

1) Those who use withholding from the RMD in the past to pay taxes may need to switch to quarterly estimates for 2020.
2) Total QCDs will come down with no RMD, but you might still distribute enough to fund QCDs
3) You could still distribute enough to do QCDs plus withholding. You will have the flexibility to distribute any amount you wish
4) While your future RMDs will be higher by not reducing your balance for 2020 RMDs, these higher RMDs will be offset by both a lower balance due to the bear market AND the expected new RMD tables kicking in for 2021.
5) What would have been your RMD could be replaced by conversions in 2020.
Any relief for those who have already taken a RMD and beyond the 60 day window?
Gill
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Re: RMDs May Not Be Required for 2020

Post by Retired1809 »

To anybody asking for answers to questions, let me refer you to the link and its embodied links to the draft legislation. I am not expressing any opinion whatsoever. I am only reporting something that has been reported on CNBC that could well affect our personal financial and tax planning for 2020.
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Re: RMDs May Not Be Required for 2020

Post by LadyGeek »

As a reminder, proposed legislation is off-topic. From: Political comments and proposed tax plan remain off-topic
Speculation about future legislation is prohibited by forum policy, see Unacceptable Topics:
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The whole point of the policy is to (1) eliminate contentious disagreements that result from these discussions and (2) keep investors from making bad decisions. Proposed legislation changes many times between the time it's introduced and signed into law.
This thread has run its course and is locked. This thread can be reopened when the legislation has been signed into law.
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IRS Suspends RMD

Post by NavyIC3 »

[Thread merged into here, see below. --admin LadyGeek]

IRS suspended the RMD from 401's and IRA's for 2020. Might be a good idea to do a Roth conversion for the amount of the RMD.
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Re: IRS Suspends RMD

Post by DemoEngr »

i cant find it anywhere so far, but does anyone know if this applies to inherited IRAs as well?
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Re: IRS Suspends RMD

Post by 02nz »

The IRS does not suspend RMDs any more than the IRS sets income tax rates. This is a matter of law, and so legislation has to be passed that suspends RMDs. That legislation is in progress and as such cannot be discussed until it's signed.
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Re: IRS Suspends RMD [locked - discussion of proposed legislation not permitted]

Post by prudent »

Until there is a law passed by Congress and signed into law, forum policy prohibits discussion as it is just proposed legislation.
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2020 RMD waived under stimulus bill?

Post by hbdad »

Now that the stimulus bill has been passed, is it confirmed that 2020 RMDs have been waived? Are there any exceptions? For instance, do people with inherited IRAs still have to take one?
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No RMD In 2020?

Post by Munir »

[Thread merged into here, see below. --admin LadyGeek]

The President just signed into law the new $2 Trillion finance bill which cancels RMDs in 2020. Is this correct? It makes it more attractive to do Roth conversions this year if RMDs are not required. Thoughts?
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Re: IRS Suspends RMD

Post by LadyGeek »

The bill has been signed into law. This thread is reopened to continue the discussion.

(Thread title changed back.)
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Re: IRS Suspends RMD

Post by Alan S. »

NavyIC3 wrote: Fri Mar 27, 2020 10:00 am IRS suspended the RMD from 401's and IRA's for 2020. Might be a good idea to do a Roth conversion for the amount of the RMD.
Yes, treat this like you are back in your pre RMD years.
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Re: IRS Suspends RMD

Post by GerryL »

It would seem that you are free to take money from your IRA but you don't have to meet the RMD mark. I will wait a while to see all the nooks and crannies of this decision.

For example, I would like to know whether the QCDs that I executed in January will still count as QCDs (not counted in my AGI) if I do not take my full RMD. I would think so, but you never know.
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Re: No RMD In 2020?

Post by Munir »

What happened to my post that I submitted as soon as the President signed the bill into law?
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Re: IRS Suspends RMD

Post by ralph124cf »

Does this mean that we do not have to take this year's RMD at all, or if it is just delayed to next year?
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Re: RMDs May Not Be Required for 2020

Post by LadyGeek »

The bill has been signed into law. This thread is reopened to continue the discussion.
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Re: RMDs May Not Be Required for 2020

Post by LadyGeek »

I merged hbdad's question into the on-going discussion.
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Re: RMDs May Not Be Required for 2020

Post by LadyGeek »

Munir - I merged your thread into the on-going discussion. The combined thread is in the Personal Finance (Not Investing) forum.

(I don't see any other posts that you might have made.)
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Re: RMDs May Not Be Required for 2020

Post by Retired1809 »

As a Boglehead, I want to thank my fellow members who monitor these duscussion boards. Their work is remarkable. Their work results in civil discourse in a world where civil discourse is rare. So thank you, Boglehead monitors.
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Re: RMDs May Not Be Required for 2020

Post by Munir »

There was a question raised in the last hour or so which I cannot locate due to the merger of posts on this new development. It asked if inherited IRAs are included in the exemption from taking an RMD this year. I found an opinion in Kiplingers' 3/27/20 issue which I quote below:

"Distributions from inherited IRAs are not included in the waiver and will still need to be taken in 2020."
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Re: IRS Suspends RMD

Post by celia »

Alan S. wrote: Fri Mar 27, 2020 4:09 pm
NavyIC3 wrote: Fri Mar 27, 2020 10:00 am IRS suspended the RMD from 401's and IRA's for 2020. Might be a good idea to do a Roth conversion for the amount of the RMD.
Yes, treat this like you are back in your pre RMD years.
... unless you are over 70.5 and want to do an optional QCD.
A dollar in Roth is worth more than a dollar in a taxable account. A dollar in taxable is worth more than a dollar in a tax-deferred account.
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Re: IRS Suspends RMD

Post by Alan S. »

GerryL wrote: Fri Mar 27, 2020 4:12 pm It would seem that you are free to take money from your IRA but you don't have to meet the RMD mark. I will wait a while to see all the nooks and crannies of this decision.

For example, I would like to know whether the QCDs that I executed in January will still count as QCDs (not counted in my AGI) if I do not take my full RMD. I would think so, but you never know.
Yes, still count. You can do a QCD as part of your RMD or separately. In fact, those who will start RMDs at 72 will have either one or two tax years prior to RMDs in which they can do a QCD, which is still allowed at 70.5. 2020 will function like one of those years.
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Re: 2020 RMD waived under stimulus bill?

Post by Munir »

hbdad wrote: Fri Mar 27, 2020 3:27 pm Now that the stimulus bill has been passed, is it confirmed that 2020 RMDs have been waived? Are there any exceptions? For instance, do people with inherited IRAs still have to take one?
See my response above quoting Kiplinger's.

To LadyGeek: shouldn't the title be changed to read that RMDs are not required in 2020 instead of "May not be required"
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Re: RMDs May Not Be Required for 2020

Post by Flobes »

Munir wrote: Fri Mar 27, 2020 4:55 pm There was a question raised in the last hour or so... It asked if inherited IRAs are included in the exemption from taking an RMD this year. I found an opinion in Kiplingers' 3/27/20 issue which I quote below:

"Distributions from inherited IRAs are not included in the waiver and will still need to be taken in 2020."
Forbes article does not agree.
Congress Suspends Required Minimum Distributions

"Children, grandchildren and others who have inherited IRAs (pretax IRAs and Roth IRAs) must take annual withdrawals regardless of their own age. They too get an RMD holiday for 2020."

Stay tuned.
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Re: RMDs May Not Be Required for 2020

Post by Munir »

Flobes wrote: Fri Mar 27, 2020 5:09 pm
Munir wrote: Fri Mar 27, 2020 4:55 pm There was a question raised in the last hour or so... It asked if inherited IRAs are included in the exemption from taking an RMD this year. I found an opinion in Kiplingers' 3/27/20 issue which I quote below:

"Distributions from inherited IRAs are not included in the waiver and will still need to be taken in 2020."
Forbes article does not agree.
Congress Suspends Required Minimum Distributions

"Children, grandchildren and others who have inherited IRAs (pretax IRAs and Roth IRAs) must take annual withdrawals regardless of their own age. They too get an RMD holiday for 2020."

Stay tuned.
Wow! I guess we need an "expert" to tell us which opinion is correct: Forbes or Kiplinger's.
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Re: RMDs May Not Be Required for 2020

Post by btenny »

Has anybody actually looked at the passed bill? All these opinions and discussions above are just guesses if the actual bill is unclear. Or is the bill posted anywhere so some of us can go read it and see if any of this stuff is discussed?

Just asking.
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Re: RMDs May Not Be Required for 2020

Post by cherijoh »

Munir wrote: Fri Mar 27, 2020 5:12 pm
Flobes wrote: Fri Mar 27, 2020 5:09 pm
Munir wrote: Fri Mar 27, 2020 4:55 pm There was a question raised in the last hour or so... It asked if inherited IRAs are included in the exemption from taking an RMD this year. I found an opinion in Kiplingers' 3/27/20 issue which I quote below:

"Distributions from inherited IRAs are not included in the waiver and will still need to be taken in 2020."
Forbes article does not agree.
Congress Suspends Required Minimum Distributions

"Children, grandchildren and others who have inherited IRAs (pretax IRAs and Roth IRAs) must take annual withdrawals regardless of their own age. They too get an RMD holiday for 2020."

Stay tuned.
Wow! I guess we need an "expert" to tell us which opinion is correct: Forbes or Kiplinger's.
I know that an RMD from an inherited IRA was NOT required in 2009 when they passed similar legislation due to the Great Recession.
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Re: RMDs May Not Be Required for 2020

Post by cherijoh »

Munir wrote: Fri Mar 27, 2020 5:12 pm
Flobes wrote: Fri Mar 27, 2020 5:09 pm
Munir wrote: Fri Mar 27, 2020 4:55 pm There was a question raised in the last hour or so... It asked if inherited IRAs are included in the exemption from taking an RMD this year. I found an opinion in Kiplingers' 3/27/20 issue which I quote below:

"Distributions from inherited IRAs are not included in the waiver and will still need to be taken in 2020."
Forbes article does not agree.
Congress Suspends Required Minimum Distributions

"Children, grandchildren and others who have inherited IRAs (pretax IRAs and Roth IRAs) must take annual withdrawals regardless of their own age. They too get an RMD holiday for 2020."

Stay tuned.
Wow! I guess we need an "expert" to tell us which opinion is correct: Forbes or Kiplinger's.
I know that an RMD from an inherited IRA was NOT required in 2009 when they passed similar legislation due to the Great Recession.
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Re: RMDs May Not Be Required for 2020

Post by dodecahedron »

btenny wrote: Fri Mar 27, 2020 5:24 pm Has anybody actually looked at the passed bill? All these opinions and discussions above are just guesses if the actual bill is unclear. Or is the bill posted anywhere so some of us can go read it and see if any of this stuff is discussed?

Just asking.
NPR has a link to the final version of the bill here:

https://www.npr.org/2020/03/25/82075954 ... elief-bill

(Scroll to the end of the page for the link to the text. It is 880 pages long but the table of contents indicates the section you want is near the end.)
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Re: IRS Suspends RMD

Post by jeep5ter »

Question: if one has taken 2020 RMD, can it be reversed?
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Re: RMDs May Not Be Required for 2020

Post by Oicuryy »

btenny wrote: Fri Mar 27, 2020 5:24 pm Has anybody actually looked at the passed bill? All these opinions and discussions above are just guesses if the actual bill is unclear. Or is the bill posted anywhere so some of us can go read it and see if any of this stuff is discussed?

Just asking.
See section 2203.
https://www.congress.gov/bill/116th-con ... 09B78FEA64

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Re: IRS Suspends RMD

Post by Gill »

jeep5ter wrote: Fri Mar 27, 2020 6:18 pm Question: if one has taken 2020 RMD, can it be reversed?
That’s the big question, particularly where more than 60 days has elapsed. It would only seem fair to allow the return of the amount distributed. Hoping this will be clarified.
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Re: IRS Suspends RMD

Post by retiringwhen »

Any word on inherited IRAs?
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Re: IRS Suspends RMD

Post by veggivet »

retiringwhen wrote: Fri Mar 27, 2020 6:48 pm Any word on inherited IRAs?
I read in a WSJ article today that inherited IRAs are still subject to required withdrawals.

SEE POST BELOW for retraction.
Last edited by veggivet on Fri Mar 27, 2020 7:19 pm, edited 1 time in total.
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Re: IRS Suspends RMD

Post by retiringwhen »

veggivet wrote: Fri Mar 27, 2020 7:03 pm
retiringwhen wrote: Fri Mar 27, 2020 6:48 pm Any word on inherited IRAs?
I read in a WSJ article today that inherited IRAs are still subject to required withdrawals.
Dang.
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Re: IRS Suspends RMD

Post by Lynette »

Bit of mess being too quick! In January I took QCDs, RMDs and had tax withheld. I do not want to reverse the RMDs. I did this early to simplify my taxes. Oh well.
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Re: IRS Suspends RMD

Post by J295 »

veggivet wrote: Fri Mar 27, 2020 7:03 pm
retiringwhen wrote: Fri Mar 27, 2020 6:48 pm Any word on inherited IRAs?
I read in a WSJ article today that inherited IRAs are still subject to required withdrawals.
I will look in today’s WSJ, but previously the press was reporting that inherited IRA’s would be be included in the retirement plans that could choose to not take the 2020 RMD. We will need to get clarification on this/review the actual text of the law.
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Re: IRS Suspends RMD

Post by veggivet »

I reread the article, which was focused on taking advantage of the market's decline to do some Roth conversions. In the article, the author mentioned that inherited IRAs were subject to required withdrawals, but I just realized that this article was published just before the new bill was signed, so I retract my previous answer.
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Re: IRS Suspends RMD

Post by Alan S. »

Inherited IRA RMDs are waived by the CARES Act.

However, unlike owned IRAs if a distribution (RMD or not) has been taken from an inherited IRA by a non spouse beneficiary, there is no way to get that money back into the inherited IRA.
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Re: RMDs May Not Be Required for 2020

Post by UpsetRaptor »

Also wondering about inherited IRAs. The text of the new law states the RMD waiver simply applies to "an individual retirement plan". That's...pretty generic.

FWIW, the 2020 text is almost exactly the same as the 2009 text, which as a previous poster noted waived RMDs on inherited IRAs for that year.

2020 text
SEC. 2203. TEMPORARY WAIVER OF REQUIRED MINIMUM
DISTRIBUTION RULES FOR CERTAIN RETIREMENT PLANS AND ACCOUNTS.
(a) IN GENERAL.—Section 401(a)(9) of the Internal
Revenue Code of 1986 is amended by adding at the end
the following new subparagraph:
(I) TEMPORARY WAIVER OF MINIMUM REQUIRED DISTRIBUTION.—

(i) IN GENERAL.—The requirements
of this paragraph shall not apply for calendar year 2020 to—
(I) a defined contribution plan
which is described in this subsection
or in section 403(a) or 403(b),
(II) a defined contribution plan
which is an eligible deferred compensation plan described in section
457(b) but only if such plan is maintained by an employer described in
section 457(e)(1)(A), or
(III) an individual retirement plan.


2009 text
(H)Temporary waiver of minimum required distribution.
(i) In general. The requirements of this paragraph shall not apply for
calendar year 2009 to—
(I) a defined contribution plan which is described in this
subsection or in section 403(a) or 403(b),
(II) a defined contribution plan which is an eligible deferred
compensation plan described in section 457(b) but only if
such plan is maintained by an employer described in
section 457(e)(1)(A), or
(III) an individual retirement plan.
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Re: IRS Suspends RMD

Post by Flobes »

retiringwhen wrote: Fri Mar 27, 2020 6:48 pm Any word on inherited IRAs?
Here' a conversation in another thread:
cherijoh wrote: Fri Mar 27, 2020 5:30 pm
Munir wrote: Fri Mar 27, 2020 5:12 pm
Flobes wrote: Fri Mar 27, 2020 5:09 pm
Munir wrote: Fri Mar 27, 2020 4:55 pm There was a question raised in the last hour or so... It asked if inherited IRAs are included in the exemption from taking an RMD this year. I found an opinion in Kiplingers' 3/27/20 issue which I quote below:

"Distributions from inherited IRAs are not included in the waiver and will still need to be taken in 2020."
Forbes article does not agree.
Congress Suspends Required Minimum Distributions

"Children, grandchildren and others who have inherited IRAs (pretax IRAs and Roth IRAs) must take annual withdrawals regardless of their own age. They too get an RMD holiday for 2020."
Wow! I guess we need an "expert" to tell us which opinion is correct: Forbes or Kiplinger's.
I know that an RMD from an inherited IRA was NOT required in 2009 when they passed similar legislation due to the Great Recession.
Along with this definitive reply:
Oicuryy wrote: Fri Mar 27, 2020 6:22 pm See section 2203.
https://www.congress.gov/bill/116th-con ... 09B78FEA64
I've now read and reread this. As someone who does not speak nor think in legalese government lingo, I need a translation to answer the question: Are RMDs for inherited IRAs suspended for 2020?
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Re: IRS Suspends RMD

Post by veggivet »

YES! Good news for many, I'm sure.
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Re: IRS Suspends RMD

Post by Chip Munk »

Does anyone know if the waiver applies to the final RMD for someone who passed away in 2020? I will be receiving an Inherited IRA sometime this year and was prepared to split the final RMD among my siblings, but maybe we don't need to take that RMD after all?
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Re: IRS Suspends RMD

Post by Flobes »

Chip Munk wrote: Fri Mar 27, 2020 8:52 pm Does anyone know if the waiver applies to the final RMD for someone who passed away in 2020? I will be receiving an Inherited IRA sometime this year and was prepared to split the final RMD among my siblings, but maybe we don't need to take that RMD after all?
The wise and all-knowing Alan S. answered this in another thread today:
Alan S. wrote: Fri Mar 27, 2020 7:13 pm ... passed in 2020. Therefore, the Secure Act applies.

Since the CARES Act signed today eliminates 2020 RMDs, there is no year of death RMD to be distributed. There are no annual beneficiary RMDs required, so each beneficiary can determine their own distribution pattern, investments, successor beneficiaries, etc. When these beneficiaries pass, their successor beneficiaries will have to adhere to the original distribution period, ie they will have to also drain the inherited IRA by 12/31/2030.

The most critical factor here is that the account can only be moved by direct trustee transfer. Any distribution check payable to a beneficiary will be an irrevocable taxable distribution, so they all need to be careful when transferring the inherited IRAs.
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Re: IRS Suspends RMD

Post by Mel Lindauer »

jeep5ter wrote: Fri Mar 27, 2020 6:18 pm Question: if one has taken 2020 RMD, can it be reversed?
Yes, according to this article:
https://www.kitces.com/blog/analyzing-t ... s-pandemic
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Re: IRS Suspends RMD

Post by Chip Munk »

Flobes wrote: Fri Mar 27, 2020 8:59 pm
Chip Munk wrote: Fri Mar 27, 2020 8:52 pm Does anyone know if the waiver applies to the final RMD for someone who passed away in 2020? I will be receiving an Inherited IRA sometime this year and was prepared to split the final RMD among my siblings, but maybe we don't need to take that RMD after all?
The wise and all-knowing Alan S. answered this in another thread today:
Alan S. wrote: Fri Mar 27, 2020 7:13 pm ... passed in 2020. Therefore, the Secure Act applies.

Since the CARES Act signed today eliminates 2020 RMDs, there is no year of death RMD to be distributed. There are no annual beneficiary RMDs required, so each beneficiary can determine their own distribution pattern, investments, successor beneficiaries, etc. When these beneficiaries pass, their successor beneficiaries will have to adhere to the original distribution period, ie they will have to also drain the inherited IRA by 12/31/2030.

The most critical factor here is that the account can only be moved by direct trustee transfer. Any distribution check payable to a beneficiary will be an irrevocable taxable distribution, so they all need to be careful when transferring the inherited IRAs.
Thank you both for the help!
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GerryL
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Joined: Fri Sep 20, 2013 11:40 pm

Re: IRS Suspends RMD

Post by GerryL »

Mel Lindauer wrote: Fri Mar 27, 2020 9:04 pm
jeep5ter wrote: Fri Mar 27, 2020 6:18 pm Question: if one has taken 2020 RMD, can it be reversed?
Yes, according to this article:
https://www.kitces.com/blog/analyzing-t ... s-pandemic
Well, except if taken as a QCD, I suppose. Not whining, just an observation.
Perhaps the amount that was paid out as QCDs could be added back into the IRA and then itemized as a charitable deduction. If possible I suppose I could do some math and figure out how that would impact my MAGI.
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