What You Need To Know About RMDs In 2020

by Megan Hiles
Photo of person crunching numbers on a calculator

A lot has happened so far in 2020, and changes to RMDs are no different.

RMD Basics

A required minimum distribution (RMD) is the amount of money that must be withdrawn from a traditional IRA, SEP, or SIMPLE individual retirement account (IRA) by owners and qualified retirement plan participants of retirement age.

For 2020, RMDs apply to anyone who was at least age 70 ½ years old by the end of 2019 (for future years, the SECURE Act increased the RMD beginning age to 72). Typically, clients who turned 70 ½ in 2019 would have to take two distributions by December 31, 2020—first, their 2019 distribution, which is due by April 1, 2020, and second, their 2020 distribution, due by December 31, 2020.


The Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE Act) became law on December 20, 2019, and increased the required minimum distribution (RMD) age for retirement accounts to 72 (up from 70½).


Passed in March of 2020, the CARES Act waived all RMD obligations for 2020, no matter your age. The waiver applies to all types of accounts subject to the RMD rules, including 401(k)s, IRAs, 403(b) plans, SEP IRAs, and even 457(b) plans. RMD amounts are calculated based on the account value at the end of the prior year. Many individuals have experienced a reduction in their account values this year, which would cause the amount of the required withdrawal to be a more significant percentage of a retiree’s account.

60-Day Period Deadline Extended

On June 23, the Internal Revenue Service announced that anyone who already took a required minimum distribution in 2020 from certain retirement accounts can roll those funds back into a retirement account following the CARES Act RMD waiver for 2020. The 60-day rollover period for any RMDs already taken this year has been extended to August 31, 2020, to give taxpayers time to take advantage of this opportunity.

Key Takeaways

  • Any taxpayer with an RMD due in 2020 from a defined-contribution retirement plan (401(k) or 403(b) plan, or an IRA) can skip those RMDs this year.
  • If you took an RMD in 2020, you have the opportunity to roll those funds back into a retirement account, but only until August 31, 2020. You should keep the money if you need it, but if you don’t, putting it back into a retirement account allows the money to grow for a more extended period and result in less taxable income for 2020.

If you have further questions regarding RMDs, please don’t hesitate to reach out to one of our team members.