RMDs Taken in January
Is it the case that, under the CARES Act, any RMD distributions taken from February 1 to July 15 be treated as a rollover and deposited back into a qualified plan or an IRA up until July 15? Assuming that to be the case, is one who took an RMD in January is stuck with that decision? If so, that seems utterly arbitrary. How can that be?
I have a client who has been taking monthly installments from his Federal Employees’ TSP to satisfy his RMD. Can he rollover the aggregate value of those distributions from February 1 to the present back into the TSP or into an IRA and suspend distributions for the remainder of the year?
Permalink Submitted by Alan - IRA critic on Fri, 2020-06-05 20:59
That’s basically correct due to a tax code provision in which the IRS relief granted only applied to actions with a due date of 4/1 or later. A 2/1 distribution had a 60 day rollover deadline of 4/1, but all January distribution rollover deadlines were pre 4/1. The January distributions are left out, but this seeming inequity is well known and relief MAY be granted at some point. The client should be able to either roll the TSP distributions to an IRA or back to the TSP if the TSP will accept them. SInce these were NOT IRA distributions, the one rollover per 12 month period limit does not apply. Have client check with the TSP regarding cessation of further distributions per the CARES Act RMD waiver. Finally, back to the January distribution, note that if the client qualifies for a CRD based on current or future expanded eligibility, that will allow the January distribution to be treated as a CRD, and eligible for rollover up to 3 years from the received date of the January distribution.