CARES Act and 2020 RMDs

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CARES Act and 2020 RMDs

Our country is in an unprecedented state because of the COVID-19 virus, resulting in hardships for many individuals and families. In response, Congress passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which provides tax and retirement relief to affected individuals. Some provisions apply to everyone; others require certain requirements to be satisfied. Here’s what you need to know about the new legislation.


Any 2019 tax or retirement-related action due by April 15, 2020, has been extended three months to July 15, 2020. This extension applies to the following actions:

  • Filing 2019 tax returns
  • Depositing 2019 individual traditional and Roth IRA contributions
  • Depositing employer SEP, SIMPLE, and qualified retirement plan contributions
  • Correcting 2019 contributions via a return of excess or recharacterization


All 2020 RMDs from IRAs and individual retirement plans have been waived. This also applies if your first RMD year was 2019 and you chose to defer your 2019 RMD until the beginning of 2020. The waiver applies to all IRA registrations, including SEP, SIMPLE, and inherited IRAs. You may still choose to take distributions from your IRAs, but no minimum distribution amount is required for 2020.


The CARES Act, signed into law March 27, 2020, provides additional relief for individuals directly affected by the virus. It allows affected individuals to take up to $100,000 from their retirement accounts. This is a combined limit across all of an individual’s IRAs and retirement plans, and the 10 percent early withdrawal penalty is waived for anyone younger than 59½. The relief gives these affected individuals 3 years to repay the distribution to their retirement account to avoid paying taxes on the amount. If the distribution is not returned, however, individuals can spread the tax liability due on the distribution over a 3-year period. To qualify as a coronavirus-related distribution,

it must be made between January 1, 2020, and December 31, 2020, and must be made to an individual who satisfies one of three stipulations*:

  1. Has been diagnosed with SARS-CoV-2 or COVID-19 (approved test)
  2. Has a spouse or dependent who has been diagnosed with SARS-CoV-2 or COVID-19 (approved test)2020
  3. Has suffered adverse financial consequences for any of these reasons:
  • Quarantined
  • Furloughed
  • Laid off
  • Unable to work because of lack of childcare due to such virus or disease
  • Having to work reduced hours due to such virus or disease
  • Closing or reducing hours of a business owned or operated by the individual
  • Other factors as determined by the Secretary of the Treasury (or the Secretary’s delegate)

*When filing taxes, it is your responsibility to determine whether you qualify for a coronavirus-related distribution.



One of the most prominent areas of relief provided by the CARES Act is the waiver of 2020 RMDs for individual and inherited IRAs. Because this waiver occurred a few months into 2020, several questions have emerged relating to rollovers and how they affect those who have already satisfied their RMDs. Here are answers to some of the most frequently asked questions.

Q: What if I already took my RMD?

A: If you took your RMD within the last 60 days, you can put the money back into your IRA as a 60-day rollover. Additionally, under the CARES Act, if you took your RMD between February 1, 2020, and May 15, 2020, you have until July 15, 2020, to roll it back in.  *On June 23, 2020 the IRS announced that the 60 day rollover period for any RMDs already taken this year has been extended to August 31, 2020, to give taxpayers time to take advantage of the opportunity.

Q: Does this apply to my Inherited IRA?

A: Yes; the restriction on rollovers to inherited IRAs does not apply. Again, individuals can return multiple distributions that were taken in 2020 to satisfy their RMD from an inherited IRA.  *This answer was updated on August 19, 2020 to reflect a change from the original waiver.

Q: In addition to RMDs, are required 72(t) payments also waived for 2020?

A: No, 72(t) payments are not classified as RMD payments and must continue under their normal distribution schedule.

Q: If I decide to forgo my 2020 RMD, do I need to take it next year, in addition to my 2021 RMD?

A: No, under the CARES Act, the RMD is waived completely for 2020. This includes individuals who turned age 70½ in 2019 and were waiting until 2020 to take their first RMD.

Q: What happens if I want to roll back my RMD and taxes were withheld from the distribution?

A: To avoid the tax liability on the gross amount of the distribution, that gross amount must be rolled back in. Typically, this means that you would need to pay out of pocket for the portion of the taxes already withheld for purposes of rolling back the gross amount of the distribution. The taxes previously withheld would then get addressed when the client files his or her taxes.

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