The new bill Trump signed yesterday eliminated the RMD from IRA's. Does this apply to current 2019 filings or next year, 2020?

[DoninGA]

Effective for calendar year 2020 only.

[dmertz]

However, although it doesn't affect your 2019 filing, if 2019 was your first RMD year making your required beginning date for RMDs April 1, 2020, you do not have to complete your 2019 RMD, so the new law can have some effect on your 2019 RMD.  Also, anyone with an RBD of April 1, 2020 who recently received a portion of their  2019 RMD in 2020 which would have been eligible for rollover had it not been an RMD can now roll that distribution over within 60-days of receipt since that distribution is no longer treated as an RMD.

[mcgintyboy]

Thanks!  I have not filed my 2019 return yet but it would have included an RMD based on the balance in the IRA as of 12/31/19. 

Can I just omit the RMD from the 1040 now? It's been less than 60 days since I took it from the IRA. 

[mcgintyboy]

Yes, based on IRA balances as of 12/31/2019, right? If I have not filed 2019 yet, can I eliminate the RMD from the 1040?

Does the RMD money withdrawn have to go back into the IRA account or is it forgiven? 

Thanks 

[dmertz]

If it's been less than 60 days since you took the distribution, the distribution wasn't reportable on your 2019 tax return in the first place.  Also, your 2019 RMD is based on your 12/31/2018 balance, not your 12/31/2019 balance.  It's the waived 2020 RMD that would have been based on your 12/31/2019 balance.

If your deadline for taking this 2019 RMD was 12/31/2019 because 2019 was not your first RMD year and you did not take the RMD in 2019, it's still a late RMD that needs to be reported on 2019 Form 5329 Part IX and, if now taken in 2020, cannot be rolled over, otherwise you can't request a waiver of the 50% excess accumulation penalty for 2019.

If you are taking about having recently taken your RMD for 2020 within the last 60 days, that can be rolled over, assuming that it would originally have been eligible for rollover if it wasn't an RMD.

[mcgintyboy]

Sorry, I must have not been clear. I'm talking about the current RMD due to be reported on my 2019 tax form which I have not yet filed. This RMD is based on the balance in my IRA on 12/31/19. 

Under the new rules in the Trump bill, should I now cancel the RMD entries on my 1040? 

If so, do the RMD funds have to be sent back to the custodian or are they just considered a tax free withdrawal from the IRA?

Thanks,

Jerry

[dmertz]

" I'm talking about the current RMD due to be reported on my 2019 tax form which I have not yet filed. This RMD is based on the balance in my IRA on 12/31/19."

That's impossible.  No RMD reportable on your 2019 tax return is based on your 12/31/2019 balance.  No distribution taken in 2020 is income reportable on your 2019 tax return, it's income reportable on your 2020 tax return.

[fanfare]

Calculate the RMD for year 2019 based on the Dec 31 2018 value.

If you did not, do it over correctly.

[mcgintyboy]

Also, if the RMD can be cancelled for 2019 what happens to the federal tax that was withheld by the custodian when the RMD was taken?

[dmertz · Accepted solution]

Taxes withheld from a distribution taken in 2020 will be credited on your 2020 tax return.  2020 TurboTax will do this when next year you enter the 2020 Form 1099-R that shows the withholding in box 4.  To be able to roll over the entire gross amount of the distribution, you'll need to substitute funds from another source to be able to complete the rollover by the 60th day following the date of the distribution.

[mcgintyboy]

Yes, and there is some discussion about extending the 60 day rule for rollovers. We'll see. 

Thanks

[dmertz]

A distribution that qualifies as coronavirus-related distribution has the rollover deadline extended to 3 years following the date of the distribution.