IRS Grants Relief to Taxpayers Who Took RMDs Prior to the CARES Act
Good News for Taxpayers
On June 23, 2020 the IRS issued Notice 2020-51. The notice granted relief to all taxpayers who took required minimum distributions (RMDs) from retirement accounts before the Cares Act waived RMDs for the 2020 tax year in March.
As per this notice, taxpayers who received their RMDs any time after January 1 may avoid taxation if the distributions are returned to the account no later than August 31, 2020.
Importantly, the notice applies to both RMDS from regular retirement accounts (traditional IRAs, 401(k)s, 403(b)) AND inherited retirement accounts. This special one-time allowance will not be counted as the taxpayer's once-per 365-day allowable rollover.
We will soon be reaching out to FPH clients who took their RMDS earlier in the year to see if they would like to return some or all of the distributions to the originating accounts.
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John H. Robinson is the founder of Financial Planning Hawaii and a co-founder of software maker, Nest Egg Guru.
DISCLOSURES
Securities offered through J.W. Cole Financial, Inc. (JWC) member FINRA/SIPC. Advisory services offered through Financial Planning Hawaii and J.W. Cole Advisors, Inc. (JWCA). Financial Planning Hawaii and JWC/JWCA are unaffiliated entities.
Fee-only financial planning services are provided through Financial Planning Hawaii, Inc, a separate Registered Investment Advisory firm. Financial Planning Hawaii does not take custody of client assets nor do its advisers take discretionary authority over client accounts.
The information contained herein is general in nature. Neither Financial Planning Hawaii nor J.W. Cole provides client-specific tax or legal advice. All readers should consult with their tax and/or legal advisors for such guidance in advance of making investment or financial planning decisions with tax or legal implications.
Securities offered through J.W. Cole Financial, Inc. (JWC) member FINRA/SIPC. Advisory services offered through Financial Planning Hawaii and J.W. Cole Advisors, Inc. (JWCA). Financial Planning Hawaii and JWC/JWCA are unaffiliated entities.
Fee-only financial planning services are provided through Financial Planning Hawaii, Inc, a separate Registered Investment Advisory firm. Financial Planning Hawaii does not take custody of client assets nor do its advisers take discretionary authority over client accounts.
The information contained herein is general in nature. Neither Financial Planning Hawaii nor J.W. Cole provides client-specific tax or legal advice. All readers should consult with their tax and/or legal advisors for such guidance in advance of making investment or financial planning decisions with tax or legal implications.
