REPAYMENT OF UNWANTED RMDS AND ROTH CONVERSIONS FROM COMPANY PLANS: TODAY’S SLOTT REPORT MAILBAG

Thursday, July 16, 2020

By Ian Berger, JD
IRA Analyst
Follow Us on Twitter: @theslottreport

Question:

For COVID “special” Aug 31 rollovers, am I allowed to return my 401(k) required minimum distribution (RMD) to my IRA?

Thank you,

Maria

Answer:

Hi Maria,

Yes, the CARES Act and subsequent IRS guidance allows unwanted 2020 401(k) RMDs to be repaid through rollover to an IRA (or company plan) by August 31.

Question:

My daughter worked for a social services employee and had a 403(b) tax-sheltered annuity plan. Some of the contributions came from her employee, some came from her. Can she “rollover” the contributions from her employer into a Roth IRA? Thanks so much!

Answer:

Yes, all 403(b) funds, including elective deferrals and employer contributions, can be converted directly to a Roth IRA. This can be done without having to first roll over the funds to a traditional IRA. Of course, she will need to pay income taxes on any amount converted, and the conversion cannot later be undone.

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