RETURN of January 06, 2020 issued 2020 RMD distribution check

Submitted by PM Jhaveri on Tue, 2020-05-12 18:03

Question posted: In December 2019 I instructed TransAmerica to Rollover 401(k) account funds to existing Fidelity IRA Rollover account. Unfortunately they transferred the account around January 06, 2020, and simetaneously issued me a 2020 RMD (Required Minimum Distribution) distribution check. They say they were required to distribute before transferring to Fidelity. Then they rolled over to Fidelity account. The skipping of 2020 RMD rule came later, so I called Fidelity and asked them to cancel the 2020 RMD and debit my bank account for the same amount as the checkrecieved from TransAmerica when they were holding the account. Fidelity said per IRS clarification they can not accept as return of the 2020 RMD as 60-day return requirement is only for RMD payments after February 01, 2020. This to me sounds unfair as i) the 2020 RMD was not requested by me but was issued because Rollover required distribution per the existing IRS Rule, and ii) the waiver of 2020 RMD requirement was published well after the date of Janury 06, 2020. How do I take benefit of waiver of 2020 RMD requirement? Thanks in advance of your response.
PM Jhaveri



Submitted by Alan - IRA critic on Tue, 2020-05-12 18:46

Unfortunately, there are thousands of people who had RMDs distributed in January that turned out not to be RMDs after the CARES Act was signed into law in late March. And many more who turned 70.5 in 2020 and were not required to start RMDs according to the Secure Act. Many of these people are waiting for some rollover relief from Congress. Right now there is no way to tell what the chances are for relief that would allow you to rollover the January distribution more than 60 days after the date of distribution. Transamerica did not do anything wrong, this was all a matter of bad luck in the timing of the related events.

Submitted by brcwm on Wed, 2020-05-13 17:18

Why not consider it a CRD rather than a normal distribution?  That would allow someone to put it back into if they took the distribution in January. 

Submitted by Alan - IRA critic on Wed, 2020-05-13 18:05

You cannot just treat the distribution as a CRD. You have to meet the specific requirements for a CRD, and then you could repay any distribution starting 1/1/2020.

Submitted by Bruce Steiner on Sat, 2020-05-23 15:01

  • While both the Senate leaders and the President don’t approve of much of what’s in the HEROES Act, and while one may argue the merits of allowing people to repay 2019 RMDs, allowing people who took distributions in 2020 that would have been required but for the CARES Act shouldn’t be controversial.  So it’s worth watching to see what if anything will be enacted.
  • Bruce Steiner

Submitted by Alan - IRA critic on Sat, 2020-05-23 16:35

Bruce, thanks for posting this. Interesting that the original CARES Act provided RMD relief for 2019 RMDs only for those with a 4/1/2020 RBD to the extent the 2019 RMD was not completed in 2019. That would have created reason for such beneficiaries who DID complete their 2019 RMD in 2019 to complain that they were penalized in comparison and should be able to roll back their 2019 RMD. But it’s quite a leap to then offer 2019 RMD relief and rollbacks for ALL 2019 RMDs regardless of the RBD. If this passes, no doubt that many taxpayers relieved of their 2019 RMD will roll the prior distributions to a Roth IRA instead of rolling back to the TIRA. More 1040X forms for 2019 unless this provision is passed in time for 2019 to be filed or extended.

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