Delay of RMD

[TaxmanGWW]

I did not take my full RMD for 2019 from one of my 401K accounts. It looks like the penalty for not doing so is removed by the CARES Act. for all of 2020.

What is the real story because tomorrow is the deadline if I must take the full RMD?

[macuser_22]

This is what Forbs says:

https://www.forbes.com/sites/jamiehopkins/2020/03/30/cares-act-drastically-changes-required-minimum-...

What is the 2020 RMD relief?

The bill stated that defined contribution plans, like 401(k)s, 403(b)s, 457(b) plans, and IRAs, may suspend RMDs in 2020. RMDs for 2020 were already a bit lower since 2020 is the first year in which the required beginning date switched from age 70.5 to age 72 – unless someone turned age 70.5 in 2019, in which case they owe an RMD by April 1, 2020. However, the new CARES Act allows account owners to skip both their 2019 RMD if it was their first year and had not yet made an RMD by April 1, 2020, and their 2020 RMD.

[TaxmanGWW]

Thanks for the answer. I know what Forbes says but I can't find any official confirmation of this. I thought TurboTax would have the latest word. IRS.gov does not have any info I can find. 

Your disclaimer says it all. Without official word, I need to withdraw money today, April 1, 2020 or be subject to the 50% tax. I think the Forbes story is true but I can't find confirmation.

Thanks again.

[macuser_22 · Accepted solution]

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@TaxmanGWW wrote:

Thanks for the answer. I know what Forbes says but I can't find any official confirmation of this. I thought TurboTax would have the latest word. IRS.gov does not have any info I can find. 

As the article says, this only applies if you turned 70 1/2 in 2019 and this is the *first*  RMD that you can elect not to take until Apr 1 of 2020.    Since your are (were) not, required to take any RMD in 2019 then the CARES act specifically says that if required in 2020 then it is waived.  

The official confirmation is the tax law itself.

https://www.congress.gov/bill/116th-congress/house-bill/748/text

SEC. 2203. Temporary waiver of required minimum distribution rules for certain retirement plans and accounts.

(a) In general.—Section 401(a)(9) of the Internal Revenue Code of 1986 is amended by adding at the end the following new subparagraph:

“(I) TEMPORARY WAIVER OF MINIMUM REQUIRED DISTRIBUTION.—

“(i) IN GENERAL.—The requirements of this paragraph shall not apply for calendar year 2020 to—

“(I) a defined contribution plan which is described in this subsection or in section 403(a) or 403(b),

“(II) a defined contribution plan which is an eligible deferred compensation plan described in section 457(b) but only if such plan is maintained by an employer described in section 457(e)(1)(A), or

“(III) an individual retirement plan.

“(ii) SPECIAL RULE FOR REQUIRED BEGINNING DATES IN 2020.—Clause (i) shall apply to any distribution which is required to be made in calendar year 2020 by reason of—

“(I) a required beginning date occurring in such calendar year, and

“(II) such distribution not having been made before January 1, 2020.

“(iii) SPECIAL RULES REGARDING WAIVER PERIOD.—For purposes of this paragraph—

“(I) the required beginning date with respect to any individual shall be determined without regard to this subparagraph for purposes of applying this paragraph for calendar years after 2020, and

“(II) if clause (ii) of subparagraph (B) applies, the 5-year period described in such clause shall be determined without regard to calendar year 202

[TaxmanGWW]

Thank you for this definitive answer. I could not find it on my own! 

I am exempt from taking the RMD for 2020.

[fanfare]

you have to be a dedicated tax geek to tease out Sec 2203 (I)(i)(III)
and Sec 2203 (I)(ii)(II) from the CARES Act.

Hey, IRS always waives the 50% penalty anyway so why worry ?

[macuser_22]

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@fanfare wrote:

you have to be a dedicated tax geek to tease out Sec 2203 (I)(i)(III)
and Sec 2203 (I)(ii)(II) from the CARES Act.

Hey, IRS always waives the 50% penalty anyway so why worry ?

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The point is that the CARES act temporary eliminates the requirement to take the 2020 RMD at all.  That can be an economic advantage for some.

And reading and understand the CARES act (and most tax law) only requires some basic intelligence - it ain't rocket science.  Quite simple really.