New IRS Guidance on CARES Act Waiver of 2020 Required Minimum Distributions includes Rollover Deadline Extension

The Coronavirus Aid, Relief, and Economic Security (CARES) Act waives required minimum distributions (RMDs) from defined contribution tax-qualified retirement plans and IRAs (including inherited IRAs) for 2020.  This includes 2019 RMDs for individuals with an April 1, 2020 RMD “required beginning date.”  When the CARES Act was enacted near the end of March 2020, many individuals had already taken their 2020 RMD when the waiver went into effect.

Although RMDs generally cannot be rolled over, 2020 RMDs are treated as voluntary distributions and are therefore eligible for rollover treatment. Rollovers generally must be done within 60 days of distribution, and IRAs are generally subject to a “one rollover per 12 months” limitation. Earlier this year, the IRS initially extended the 60-day rollover requirement to July 15, 2020, for a 2020 RMD taken as early as Feb. 1, 2020.

The latest guidance provides that individuals who received mandatory distributions from qualified retirement accounts earlier this year now have until August 31, 2020 to return the funds they don’t need without facing any tax penalties.  In addition,  the “one rollover per 12 months” limitation for IRAs and non-spouse IRA beneficiaries is waived for this purpose. In addition, the rollover opportunity is available for a 2020 distribution that is part of “a series of substantially equal periodic payments for purposes.”

The notice also provides helpful questions and answers, and two sample amendments employers may adopt to give plan participants the choice of whether or not to waive the 2020 RMD.


Sax will continue to update you as further details are made available.  Reach out to your Sax advisor or email [email protected] with questions.  For more and on-going information, visit Sax’s COVID-19 Resource Center.