Return of RMD and other IRA withdrawal

Submitted by Jay Epstein on Wed, 2020-08-19 15:11

A person withdrew $160,000 on January 9, 2020 as his RMD for 2020 (his RMD would have been $153,000), with $32,000 withheld for tax (a net of $128,000). Later he withdrew an additional $100,000 on April 29th (with 20,000 withheld for tax), a net of $80,000.

Not needing the second funds, he returned that $80,000 to his IRA on June 8th (within 60 days of the second withdrawal)

Upon hearing about the opportunity to return RMD funds, he returned $100,000 to that account on August 15th.

Is it correct that he would report the following in 2020:

1, $60,000 from the first withdrawal (160 – 100)
2. $20,000 from the second withdrawal since it was done within 60 days (100 – 80)

Or would you aggregate the withdrawals to be $260,000 of which he could only return $153,000 so that he must pull out $27,000 as an over-repayment? I’m not clear on the ordering of the withdrawals and repayment.

Could you clarify the proper treatment please. I assume the tax withholdings don’t enter into the answer, correct?

Thank you.



Submitted by Alan - IRA critic on Wed, 2020-08-19 15:37

  • Gross distribution on line 4a would be 260k, taxable amount on 4b would be 80k, with “rollover” shown on the line next to 4b. He still has the option to return another 53k by 8/31 that would further reduce the taxable amount to 27k, but he will have to come up with the other rollover money from other sources due to the withholding that has taken place. Note that the April 29 distribution and 60 day rollover does not factor in to the amount he is eligible to roll back from the Jan distribution per Notice 2020-51. He cannot do another 60 day rollover of a distribution taken before 4/29/2021 because he used up the one permitted 60 day rollover in June. 
  • The tax withholding is reflected on lines 4a and 4b, and the 4b number also assumes that he has no basis in his IRA (Form 8606).

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