CARES — RMDs
Mr. Slott’s March 27, 2020 article addresses undoing RMDs already taken. As in his books, he only dwells on IRAs and hardly even mentions 401k plans. What Mr. Slott fails to mention in that article is more undoing of RMDs already taken can be done if one has a 401k plan. If one has a 401k plan, then one can roll a RMD distribution (from an IRA or the 401k plan) into the qualified plan. There is no limit on the number of IRA-to-qualified plan rollovers (or qualified plan-to-IRA rollovers) a person can do within 12 months. Thus the limitations are not as restrictive as Mr. Slott indicates.
I turned 70 1/2 in 2019 and delayed my 2019 RMDs to 2020. There were three of these – one from my 401k plan, on from IRA-A and one from IRA-B. I am going to simply rollover these three distributions to my 401k plan.
Permalink Submitted by Alan - IRA critic on Sat, 2020-04-04 18:01
Of course, the majority of 401k plans will not accept rollover contributions after you have separated from service. If a participant is taking 401k RMDs, that indicates that they are either a >5% owner or separated from service in most cases. Therefore, if your 401k plan will not accept any rollovers, and you are still within the 60 day rollover window, you can only roll one IRA distribution (and the 401k distribution) into an IRA. For the other IRA distribution, you would have to qualify for a CV related distribution, and that would erase the one rollover limit and the 60 day limit (if applicable), and provide distribution income reporting over 3 years and rollovers for 3 years.