Returning Unwanted RMDs: Today’s Slott Report Mailbag

Thursday, August 13, 2020

By Andy Ives, CFP®, AIF®
IRA Analyst
Follow Us on Twitter: @theslottreport

Question:

Client has a Thrift Savings Plan and took RMDs in January, February and March of 2020. Client then rolled the balance of the TSP into an IRA. Question is whether or not he can “repay” those RMDs to the IRA under Notice 2020-51. Thanks.

Answer:

Yes, the three RMD payments can be “repaid” to the IRA, but a deadline is fast approaching. Plan-to-IRA rollovers do not count against the one-rollover-per-year rule, so that is not a concern. However, since these RMD payments were taken back in January, February and March, they are outside of the standard 60-day rollover window. IRS Notice 2020-51 allows RMD rollovers beyond the 60-day rollover period if they are rolled over by August 31, 2020. If the rollovers are not completed by this date, the client will be stuck with the three monthly distributions.

Question:

I returned my RMD back to my IRA account this year, but due to an unexpected event I find myself in need of money. Can I take it out again? Also, can I put part of the money into a Roth IRA? I have watched “Retire Safe & Secure! with Ed Slott” many times, I just love it every time. I also bought this program from KQED San Francisco – you are great. Thank you.

Richard

Answer:

Richard,

Thank you for the compliments! Yes, can take another withdrawal for whatever amount you wish from your IRA. Just because you took your RMD earlier and rolled it back, you are not precluded from taking another distribution, nor are you limited to only your RMD amount. However, due to the one-rollover-per-year rule and IRS Notice 2020-51, after August 31, 2020 you can no longer do another rollover until one year has passed since you paid back your RMD. As for Roth conversions, you can do one or more for whatever amount makes sense based on your tax situation and financial goals. Roth conversions do not count against the one-rollover-per-year rule.

 

 

Post Views: 8
Posted in: , , ,

Content Citation Guidelines

Below is the required verbiage that must be added to any re-branded piece from Ed Slott and Company, LLC or IRA Help, LLC. The verbiage must be used any time you take text from a piece and put it onto your own letterhead, within your newsletter, on your website, etc. Verbiage varies based on where you’re taking the content from.

Please be advised that prior to distributing re-branded content, you must send a proof to [email protected] for approval.

For white papers/other outflow pieces:

Copyright © [year of publication], [Ed Slott and Company, LLC or IRA Help, LLC – depending on what it says on the original piece] Reprinted with permission [Ed Slott and Company, LLC or IRA Help, LLC – depending on what it says on the original piece] takes no responsibility for the current accuracy of this information.

For charts:

Copyright © [year of publication], Ed Slott and Company, LLC Reprinted with permission Ed Slott and Company, LLC takes no responsibility for the current accuracy of this information.

For Slott Report articles:

Copyright © [year of article], Ed Slott and Company, LLC Reprinted from The Slott Report, [insert date of article], with permission. [Insert article URL] Ed Slott and Company, LLC takes no responsibility for the current accuracy of this article.

Please contact Matt Smith at [email protected] or (516) 536-8282 with any questions.