August 31, 2020 Deadlines

Article Posted on 08/14/2020

Updates to the Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE Act) changed the required beginning date for distributions.  These are distributions from Code Sec. 401(a) plans and other eligible retirement plans, including IRA’s. The new required beginning date for an employee or IRA owner is generally April 1 of the calendar year following the calendar year in which the individual attains age 72 (rather than 70 ½). The new required beginning date applies to distributions required to be made after December 31, 2019 with respect to individuals who attain age 70 ½ after that date.

The Coronavirus Aid, Relief, and Economic Security (CARES Act) allows any taxpayer required to take a required minimum distribution (RMD) in 2020 from a defined-contribution retirement plan, (including a 401(k), 403(b), or an IRA), to skip those RMDs in 2020. This includes anyone who turned age 70 ½ in 2019 and who would have had to take their first RMD by April 1, 2020

But since the CARES Act wasn’t passed until March 27, 2020 many individuals had already take what they thought, at the time, were their 2020 RMDs.

This change allows anyone who took a distribution (that, but for the CARES Act, would have been a RMD) to roll over that amount until August 31, 2020.

Thus, for example, if a participant received a distribution in January 2020, part of which was treated as ineligible for rollover because it was considered an RMD, that participant will have until August 31, 2020 to roll over that part of the distribution.

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