Rolling Over or Returning an RMD to an Inherited IRA

Submitted by Patricia Lahaise on Tue, 2020-06-23 18:38

Can an RMD payment from an inherited IRA be rolled back to or deposited back into the inherited IRA?



Submitted by Alan - IRA critic on Tue, 2020-06-23 19:56

  • As of yesterday, yes! Must be done by 8/31.  Since many IRA custodians are probably not aware of this yet, you might wait a couple weeks, and provide the following reference from IRS Notice 2020-51.
  • “D. Permitted repayments of RMDs previously distributed from an IRA. In the case of an IRA owner or beneficiary who has already received a distribution of an amount that would have been an RMD in 2020 but for section 2203 of the CARES Act or section 114 of the SECURE Act, the recipient may repay the distribution to the distributing IRA, even if the repayment is made more than 60 days after the distribution, provided the repayment is made no later than August 31, 2020. The repayment will be treated as a rollover for purposes of § 408(d)(3) of the Code, but will not be treated as a rollover for purposes of the one rollover per 12-month period limitation in § 408(d)(3)(B) and the restriction on rollovers for nonspousal beneficiaries in § 408(d)(3)(C). “

Submitted by [email protected] on Tue, 2020-06-23 22:04

Does it have to repaid to the same IRA (i.e. distributing IRA) or can it be made to another qualified plan to receive the extended deadline and waiver of once-per-year rule?

Submitted by Alan - IRA critic on Wed, 2020-06-24 00:01

  • The Notice as copied above indicates the inherited IRA rollover of what would have been an RMD must be made to the distributing IRA account. The deadline is 8/31 and the one rollover limit does not apply. If you were referring to the 3 year deadline for CRD repayments, that does not apply to inherited accounts. In other words, if your inherited IRA distribution would otherwise have been an RMD for 2020 you can roll it back to the same account by 8/31, but if it is treated as a CRD it cannot be rolled back or repaid but the income could be reported over 3 years.
  • Therefore, as I read the two Notices, if you have a large inherited IRA that would have had a 10k RMD in 2020, and you qualify for a CRD as well, if you took a distribution of 130k, your repayment options would be limited to the 10k RMD, but you could claim 100k as a CRD on Form 8915 E and pay the taxes over 3 years, but could NOT repay any of that. The remaining 20k would have to reported in 2020 income with no repayment option since it would not have been an RMD and is in excess of the 100k CRD limit. Pretty complex.

Submitted by ellen dawmdellipizzi on Sun, 2020-07-05 13:49

Does the 365 day rule apply to the day the distribution was taken, or, the day it was returned to the IRA?  Thanks!

Submitted by David Mertz on Sun, 2020-07-05 15:24

The 365-day rule is based on the dates of the distributions.  However, the distributions that are repaid to the distributing IRA pursuant to Notice 2020-51 as discussed in this thread are disregarded with respect to the 365-day rule.

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