Tax Info Regarding the 2020 RMD Rollover

Important Tax Information Regarding Your 2020 Required Minimum Distribution Rollover

The Coronavirus Aid, Relief, and Economic Security Act (CARES ACT) of 2020, enabled any taxpayer with a Required Minimum Distribution (RMD) due from a qualified retirement plan in 2020, a one-time exemption from taking that distribution. In addition, it allowed those that had already taken their RMD, the opportunity to roll all or a part of the distribution back into their qualified retirement plan, including the amount withheld for federal and state taxes.  

• You should receive a tax form 1099-R from the custodian showing the original distribution from the account as taxable.

• On your tax return the distribution should be added to line 4a and then potentially coded as a rollover. Any amount that was not rolled back into the IRA will be taxable and should be included on line 4b.

• By May 31, 2021, you will receive a Form 5498 from your custodian. The Form 5498 is informational only and should be retained for your records. This form will verify to the IRS the exact amount that you rolled back into your IRA. You do not have to wait until you receive the form to file your returns.

It is extremely important that you inform your tax preparer of the dollar amount you rolled back into your qualified retirement plan so they can accurately code the distribution as either taxable or a non-taxable rollover. 

If you are unsure about the amount that you rolled back into your qualified retirement plan, you can check your transactions with the custodian or feel free to reach out to us for assistance.