Waiver of RMDs

[plcahill01]

The CARES act of 27 Mar waives the RMD for 2020 and for 2019 for those who turned 70 in the first half of 2019.  I can't find this anywhere in Turbo tax and the program Really wants me to take an RMD.  Will I encounter problems if I just say no RMDs were taken and finish doing my taxes or should I go back and do all the calculations to see how much RMDs are required rather than having to prove they were waived.

[jtax]

TT should not be requiring a RMD for 2019 if you turned 70.5. If it asked if you received your RMD, try answering yes. Since no RMD was required that is correct. See the last answer to this prior question. https://ttlc.intuit.com/community/retirement/discussion/as-my-1st-yr-rmd-i-m-making-an-ira-withdrawa...

Note this has nothing to do with the CARES Act. The cares act did not change anything related to RMD's taken (or required to be taken) DURING 2019. Your case the RMD for 2019 is required to be taken in 2020. 

Some detail:

CARES Act section 2203 applies for RMDs required to be taken in 2020. It does not apply to RMD's taken during 2019. If you turned 70.5 in 2019 then a 2019 RMD was required but could be taken by April 1, 2020. If you took it in 2019 that's done. But if you didn't take it in 2019, then you aren't required to take it during 2020. 

(FYI 70.5 age increased to 72 for 2020 and later by the SECURE act).

Take a look at the law's text below and feel free to reply if you find something different in it (or elsewhere).

This is the text of the act, with my highlights.

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.—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
2020.’’.

[dmertz]

Indicate either that no RMD was required or indicate that you received all of the RMD for 2019.  Either answer will prevent 2019 TurboTax from preparing the unneeded Part IX of Form 5329.

[plcahill01]

Thank you both.  Following up on that, if I click yes we took all our RMDs and the amount is more than the required amount, does it matter?  Can you designate All your disbursement an RMD?  Thanks

[dmertz · Accepted solution]

Yes, you can indicate that all of your distribution was RMD as long as you didn't roll any of it over to another qualified retirement account.  TurboTax limits reporting rollovers to the amount in excess of the amount that you indicate is RMD,

[jtax]

[edited to say on or after Feb 1, not after]

New information. It appears that you can "undo" a RMD taken on or after Feb 1, 2020 until July 15, 2020. Basically  the 60-day rollover period is extended until July 15th 2020. January rollovers are not extended. Inherited IRA's do not get the extension either. 

I got this from https://www.vanguard.com/pdf/carescal.pdf  which also says the IRS may change the details. 

[dmertz]

Actually, the 60-day deadline has been extended to July 15 for any distribution taken on or after February 1 (subject to the normal one-rollover-per-12-months limitation on IRA distributions),

[macuser_22]

IRS Notice 2020-23, issued on April 9 extends time limited transaction defined in IRC §1031 and other time limited provisions which includes the IRA rollover 60 day limit to July 15 for distributions in Feb 2020 or later.

https://www.irs.gov/pub/irs-drop/n-20-23.pdf

[fanfare]

I just sent the following to Vanguard

" According to the new IRS Notice 2020-23, as long as you took the distribution on or after February 1, 2020, you have an extension until July 15 to complete your 60-day rollover. You must also have not already completed a 60-day rollover in the last year. " Since I'm not 72 yet, can I return distribution via this Rollover rule where the distribution was not an RMD? If so, please inform me what form I would use to do this.

Are  you saying the answer is yes and it is not COVID-affect dependent and not RMD-dependent.?

Sorry, I'm not very good at wading through IRS notice gobbledygook. 

To do it, do I just write a letter of instruction and mail in a check for deposit ?

[dmertz]

A distribution received by any individual in 2020 is not an RMD and can be rolled over (subject to the one-rollover-per-12-months rule if the distribution is from an IRA).  The individual does not need to be an eligible individual with respect to a Coronavirus-Related Distribution.  The deadline for completing the rollover of a distribution received after January 2020 is the 60th day after the date of the distribution or Junly 15, 2020, whichever is later.

[fanfare]

@dmertz 

thanks. I made the exact same point to my nephew a week ago. but when it comes to my own IRA, I drew a blank.

[jtax]

This just in. All RMDs taken in 2020 (even in January) can be rolled over through August. And it does not count against your once every 12 months limit. Wow.

https://investornews.vanguard/what-the-cares-act-means-for-you/

[sunshine26]

In July 2020 I instructed my finance person at Charles Schwab

to calculate my RMD for 2020 and take the necessary amount out of my IRA Rollover (this was before the government  waived the taking out of the RMD for 2020).  When my finance person found out about the waiver he advised me to deposit the money that was taken out back into the IRA Rollover, which he did on July 7, 2020.  I have the form 1099-R stating that I have taken the RMD money out of my IRA but now I won't get Form 5498 until May which will show that I made the deposit of the RMD back into my IRA in July.

How do I handle this situation on the Turbo Tax Form?  

Please advise as soon as possible.  Thank you.

[SamS1]

Please follow these steps to enter your 1099-R and RMD rollover:

1. Login to your TurboTax Account 
2. Click on the Search box on the top and type “1099-R”
3. Click on “Jump to 1099-R” and enter your 1099-R
4. Continue until "How much was a RMD?" and select "none"
5. Continue "Tell us if you moved the money through a rollover or conversion" and select "I rolled over some or all of it to an IRA or other retirement account within the time limits (normally 60 days)"
6. Continue answering the questions.

 RMDs were waived for 2020. You must indicate to TurboTax that none of the distribution was RMD. If you already enter the 1099-R as RMD and changing your answer to the RMD question doesn't work then you have to delete and re-enter the 1099-R form. 
  
You can verify your entry by looking at your Form 1040 line 4 or 5:

1. Click on "Tax Tools" in the left menu
2. Click "Tools"
3. Click "View Tax Summary" in the Tool Center window
4. Click on "Preview my 1040" on the left

If you are under the age of 72, you may have to temporarily change your age to 72 for the rollover then when finished, change your age back.

[bill18163]

What if you just didn't take the RMD that you were supposed to in 2020? There was an amount indicated in the last statement of 2019 in my account telling me how much I had to take in 2020. I had till Dec 31,2020 to take that amount. I had entered a note in my calendar for the middle of Dec. 2020 to remove this RMD amount but I didn't take the amount out because I found that you didn't have to take it in 2020. I have received no 1099-R so far for this account. Probably because I didn't take the distribution for the RMD. But how do I enter this information in TT? The program is saying I needed to take an RMD for 2020 and then it has those three questions that you have to choose from. Should I just choose the one that says I wasn't required to take the RMD?