All taxpayers who have taken a required minimum distribution (RMD) in 2020 (including those taken in January and February), from an eligible retirement account, now have the opportunity to roll those funds back into a retirement account by August 31, 2020. (IRS Notice 2020-51)
The CARES Act provides that taxpayers with an RMD requirement due in 2020 from a defined contribution plan, including a §401(k) or §403(b) plan, or an IRA, may skip those RMDs in 2020. The 2020 RMD suspension includes anyone who turned age 70½ in 2019 and would have had to take their first RMD by April 1, 2020. The 2020 RMD suspension does not apply to defined benefit plans.
However, prior to Notice 2020-51, taxpayers could roll their RMDs back into a retirement account by July 15, 2020, but only if the 60-day rollover deadline fell between April 1, 2020, and July 15, 2020.
Notice 2020-51 also clarifies that the one rollover per 12-month period limitation does not apply to 2020 RMDs that are recontributed to retirement accounts by August 31, 2020.
In addition to the items above, Notice 2020-51 provides:
- Questions and answers to various RMD issues for 2020; and
- A sample plan amendment that, if adopted, would provide participants a choice whether to receive waived RMDs and certain related payments.
The full text of the notice can be found at:
Source: Spidell Publishing, Inc.
IRS 90-DAY EXTENSION UPDATE
UPDATE: March 21, 2020
The IRS has issued Notice 2020-18, which clarifies some provisions for extended returns, but leaves other questions unanswered.
Here are the questions that were answered:
The April 15 income tax payment deadline has been extended to July 15 for all taxpayers, not just those below the tax due thresholds previously mentioned;
- The filing and payment extensions apply to individuals, trusts, estates, partnerships, corporations, associations, and companies;
- The relief applies only to income tax returns and income taxes, no extension is provided for the payment or deposit of any other type of federal tax, or for the filing of any federal information return;
- Payroll tax filings and payments are not extended by this notice; and
- Estimates due on April 15 are extended to July 15 (there is no discussion of second quarter estimates).
There is no discussion about extensions other than the July 15 date. We assume if a taxpayer wants an extension to October 15, an extension may be filed on or before July 15.
UPDATE: March 20, 2020
NEW FEDERAL EXTENSIONS
The Treasury Secretary announced today that the April 15 filing deadline has been extended to July 15 for all taxpayers and businesses. This means taxpayers will no longer be required to file extensions for federal purposes. They also have until July 15 to pay, so long as they fall below the thresholds of $10 million due for C corporations, and $1 million due for all other taxpayers.
The information released today did not address the March 15 filing deadline, second quarter estimate payments, payroll tax filing deadlines, or IRA contribution deadlines. We will update you on this information as it becomes available.
The new federal filing extension means taxpayers will not file an extension on April 15, and that they will have until July 15 to file without extension. The IRS has not issued any written guidance on this issue, so at this time we are not certain how further extensions will work.
NEW CALIFORNIA EXTENSIONS
The FTB is postponing until July 15 the filing and payment deadlines for all individuals, trusts, and business entities for:
- 2019 tax returns;
- 2019 tax return payments;
- 2020 1st and 2nd quarter estimate payments;
- 2020 LLC taxes and fees; and
- 2020 Non-wage withholding payments.
The FTB extended their initial extension period of June 15, 2020, to be more consistent with the IRS extension relief. Like the IRS extension, the FTB extension applies to both filing and payment deadlines, but does not limit the payment extension to those below $1 million ($10 million for corporations), and applies to estimated tax and withholding payments.
Like the IRS, the FTB is also extending this relief to all taxpayers, not just those "affected by the COVID-19 pandemic."
If you have any questions about this extension program, please contact us!