2020 INHERITED IRA RMD POSTPONED?

Submitted by lawrence mauskapf on Fri, 2020-03-27 02:19

For a inherited IRA’s, taking the old life expectancy stretch rmd’s, does the HR748 senate bill just passed, section 2203 postponed rmd apply to this type of IRA distribution.
I have read the section, but can’t seem to figure out if its yes or no.
Help!



Submitted by Alan - IRA critic on Fri, 2020-03-27 14:11

The waiver applies, but if the 2020 RMD has already been distributed it cannot be rolled back since such distributions are not eligible for rollover. However, there is a chance that the IRS could allow the money to be returned by deeming the return to be treated as a direct transfer. The IRS will likely have to address the matter of returned RMDs for owned IRAs where the 2020 RMD was removed in January or thereafter and that might also cover inherited IRAs. No telling how long it will be before the IRS gets to that job given the chaos and staffing situation. Just in case, anyone using a scheduled RMD plan should discontinue that plan unless they need the funds as soon as the bill is signed into law.

Submitted by lawrence mauskapf on Fri, 2020-03-27 17:46

Thank you for your answer.  I have not taken a 2020 RMD, but thanks for the answer, as my sibling has.  The reason for the question is inherited ira’s are sometimes treated differently than regular ira’s say for bankruptcy as a protected asset. Also I cannot find a stock broker that will allow a limited margin type account for inherited ira’s, but will for regular ira’s.This waiver may cause account holders who do not need the rmd in 2020 to be able to recalculate their Obamacare MAGI to get a larger subsidy payment, like me. 

Submitted by David Mertz on Fri, 2020-03-27 14:39

  • If I understand Sec 402(c)(4) correctly, I believe that a distribution to a non-spouse beneficiary is not permitted to be treated as an eligible rollover distribution for the purpose of Sec 401(a)(31).  Absent changes to the tax code to explicitly allow such rollovers, I don’t see how the IRS could permit a non-spouse beneficiary to do such a rollover.
  • The new Sec 401(a)(9)(I) appears to be a duplicate of the Sec 401(a)(9)(H) recently removed, just with “2020” substituted for “2009,” so whatever the IRS allowed for 2009 would seem to apply to 2020.

Submitted by Alan - IRA critic on Fri, 2020-03-27 15:39

With the amount of foul ups and unintended consequences in this rushed bill, there is likely to be a huge technical corrections bill to follow. Will have to wait and see. The IRS might be given the power to improvise and then tell Congress what is needed in the technical corrections bill.  Applying the 2009 waiver rules that became law in late 2008 for 2020 mid year was obviously a flawed decision. I guess anything is possible from here, and resolution could take considerable time.

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