2020 IRA Distribution Repayment

[DadSteve]

Under the very recent Stimulus Package no RMD has to be taken in 2020. I am over age 70.5 and have already taken a partial distribution from my IRA. Can I repay this distribution to my IRA to avoid having this included in my AGI and paying taxes for 2020? 

[NCperson]

no - that ship sailed - unless you roll back within 60 days 

[DadSteve]

Might this be allowed under Rollover Rules?

[Hal_Al]

I think so, if you meet the 60 day rule.

I'll ask for another opinion. @dmertz  

[dmertz]

Yes, any RMD received in 2020 is no longer required and can be rolled back within 60 days of the distribution as long as the distribution would have been eligible for rollover had it not been an RMD.  Additionally, if this distribution meets the definition of a coronavirus-related distribution, you have 3 years to complete the rollover:

(4) DEFINITIONS.—For purposes of this subsection—

(A) CORONAVIRUS-RELATED DISTRIBUTION.—Except as provided in paragraph (2), the term “coronavirus-related distribution” means any distribution from an eligible retirement plan made—

(i) on or after January 1, 2020, and before December 31, 2020,

(ii) to an individual—

(I) who is diagnosed with the virus SARS–CoV–2 or with coronavirus disease 2019 (COVID–19) by a test approved by the Centers for Disease Control and Prevention,

(II) whose spouse or dependent (as defined in section 152 of the Internal Revenue Code of 1986) is diagnosed with such virus or disease by such a test, or

(III) who experiences adverse financial consequences as a result of being quarantined, being furloughed or laid off or having work hours reduced due to such virus or disease, being unable to work due to lack of child care due to such virus or disease, closing or reducing hours of a business owned or operated by the individual due to such virus or disease, or other factors as determined by the Secretary of the Treasury (or the Secretary's delegate).

[dmertz]

IRS Notice 2020-51 issued on June 23, 2020 now allows until August 31, 2020 for one to "repay" a distribution made from an IRA in 2020 that would have been an RMD were it not for Section 2203(a) of the CARES Act.  This includes repayments by non-spouse beneficiaries.  The amount that can be repaid under this notice is limited to the amount that would otherwise have been required to have been distributed as an RMD.  Such a repayment also is disregarded with respect to the one-rollover-per-12-months rule.

(Apparently by terming it a "repayment" and limiting it to amounts that would otherwise be an RMD, it avoids limitations that would otherwise apply to rollovers, effectively a return of a mistaken distribution.)

[marlag]

If a person  repays100% of the IRA distribution received, but had tax withheld, will they still get credit for the withholding?

[VolvoGirl]

Yes.  And when you repay it you need to add the withholding back in from your own money or the withholding will become a distribution itself.  

You enter the 1099R and withholding is in box 4.  It will be on 1040 line 17 with all your other withholding like from W2.