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The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was passed into law on March 27, 2020, and includes flexibility for retirement savers including temporary waivers for 2020 required minimum distributions (RMD) from an individual retirement account (IRA) or an employer-provided qualified retirement plan that is a defined contribution plan.1

2020 RMDs are not required as of January 1, 2020, through December 31, 2020. For taxpayers who have not taken any distributions for the year and do not want to take a distribution, the law is simple. The penalty for not taking an RMD does not apply for 2020. This waiver applies to individuals who turned 70 1/2 before 2020 or heirs of an inherited IRA/Roth or retirement plan account subject to RMDs. The next RMDs for these plans will be for calendar-year 2021.

Are taxpayers who have already received their RMDs for 2020 allowed to recontribute the distributions? On June 25, the IRS released Notice 2020-51 providing repayment relief for certain RMDs already distributed. 

In Notice 2020-51, the IRS generally permits waived RMDs taken in 2020 to be recontributed by August 31, 2020. The notice provides the following guidance:

  • The 60-day rollover period for such payments is extended to August 31, 2020.
  • Permitted repayments will not be treated as a rollover for purposes of the one rollover per 12-month period limitation.
  • The relief applies even if the RMD is received as part of a series of substantially equal periodic payments.  
  • The time period to make a direct rollover for a nonspouse designated beneficiary is extended if the participant died in 2019.

First-Year Distributions

If a taxpayer turned 70 1/2 in 2019 and had not yet taken their first distribution prior to the passage of the CARES Act and suspension of RMDs for 2020, the taxpayer can now waive both previously required withdrawals in 2020. If the taxpayer took the initial RMD in 2019, the distribution is not waived and cannot be recontributed.

Coronavirus-Related Distributions

If a taxpayer has suffered due to COVID-19, they may be able to take a 2020 coronavirus-related distribution (CRD) up to $100,000 from an eligible retirement plan. Eligible retirement plans include certain employer retirement plans, such as Section 401(k) and 403(b) plans and IRAs.

To qualify under these rules, the taxpayer, their spouse, or a dependent must be diagnosed as COVID-19 positive, or they must be experiencing financial hardship as a result of being quarantined, furloughed, or laid off; having to work reduced hours due to the coronavirus; being unable to work due to a lack of child care; or closing or reducing hours of a business owned or operated by the individual. 

Benefits of a Taking a Coronavirus-Related Distribution

  • The 10 percent additional tax on early distributions does not apply to any CRDs.
  • All or part of a CRD may be repaid to an eligible retirement plan for up to three years after the distribution has been received.
  • Any repayment will be treated as a direct trustee-to-trustee transfer, so you do not owe federal income tax on the distribution.

IRS FAQ #7 on coronavirus-related retirement plan relief provides the below example of a CRD repayment:

If, for example, you receive a coronavirus-related distribution in 2020, you choose to include the distribution amount in income over a 3-year period (2020, 2021, and 2022), and you choose to repay the full amount to an eligible retirement plan in 2022, you may file amended federal income tax returns for 2020 and 2021 to claim a refund of the tax attributable to the amount of the distribution that you included in income for those years, and you will not be required to include any amount in income in 2022. 

For more information, reach out to your BKD Trusted Advisor™ or use the Contact Us form below.


IRC §401(a)(9) applies to individual retirement plans and defined contribution plans described in §403(a), §403(b), or §457(b) if maintained by an employer described in §457(e)(1)(A). 

FORVIS Private Client services may include investment advisory services provided by FORVIS Wealth Advisors, LLC, an SEC-registered investment adviser, and/or accounting, tax, and related solutions provided by FORVIS, LLP. The information in this presentation should not be considered investment advice to you, nor an offer to buy or sell any securities or financial instruments. The services, or investment strategies, mentioned in this presentation may not be available to, or suitable, for you. Consult a financial advisor or tax professional before implementing any investment, tax, or other strategy mentioned herein. The information herein is believed to be accurate as of the time it is presented and it may become inaccurate or outdated with the passage of time. Past performance does not guarantee future performance. All investments may lose money.

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