A distribution occurring on December 31, 2020 will not qualify as a coronavirus-related distribution.

Submitted by David Mertz on Mon, 2020-03-30 00:21

Odd that a distribution occurring on Thursday, December 31, 2020 will not qualify as a coronavirus-related distribution. Seems like a drafting error in the CARES Act. The text of the bill defines such a distribution as being made “on or after January 1, 2020, and before December 31, 2020.”



Submitted by Alan - IRA critic on Mon, 2020-03-30 02:02

  • It’s awkward, but perhaps to match up with the 3 year “day after” rollback deadline ending on 12/31/2023 per provision copied below:
  • “(A) IN GENERAL.—Any individual who re ceives a coronavirus-related distribution may, at  any time during the 3-year period beginning on  the day after the date on which such distribution was received, make 1 or more contributions in an aggregate amount not to exceed the amount of such distribution to an eligible retirement plan of which such individual is a bene- at al”

Submitted by David Mertz on Mon, 2020-03-30 03:27

But that doesn’t really explain it.  With the last date for a CRD being 12/30/2020, the corresponding 3-year period would begin on 12/31/2020 and end on 12/30/2023, not on 12/31/2023.  That’s just as awkward.

Submitted by Alan - IRA critic on Mon, 2020-03-30 04:28

  • Yes, it’s awkward under any interpretation. I just thought the reason for shorting the distribution date by one day might have been to wrap up all the rollovers by year end 2023. No custodian or the IRS would want to have any rollbacks received in 2024. But the fly in the ointment is the inability to determine the actual distribution receipt date.
  • I guess the next stimulus bill is already in the hopper and it will include a ton of technical corrections. Perhaps this will be one of them, but I don’t see any way for this provision to be made simple.
  • As has historically been the case, enforcement of the various rollover rules is done by custodians, not the IRS. This one is going to drive the custodians crazy, starting right now. I don’t think the IRS will do anything to enforce these rules other than to depend on the custodians. I also think that the way this entire provision will play out is that ALL 2020 distributions will be treated as CV related, then no one will have to vet them. Should be interesting.

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