but is it really the final fix for the secure act 10-year rmd rule?
by seymour goldberg
the irs has issued an updated version of publication 590-b, distributions from individual retirement arrangements.
and the irs says the new version is to be used in preparing 2020 returns.
more: tax alert: irs pledges to fix secure act 10-year rmd rule
watch this space for a deeper dive.
meanwhile, here are the highlights:
- coronavirus-related distributions. recent legislation contains special rules that provide for tax-favored withdrawals, income inclusion, and repayments for certain individuals who were impacted by the coronavirus in 2020.
- special rules for qualified disaster distributions and repayments expanded. the special rules for qualified disaster distributions and repayments are expanded to apply to those disasters described in the taxpayer certainty and disaster tax relief act of 2020. a qualified disaster is now expanded to include a major disaster that was declared before february 26, 2021, by the president under section 401 of the stafford act and that occurred on or after december 28, 2019, and on or before december 27, 2020, and continued no later than january 26, 2021. however, this change does not include a major disaster that has been declared only by reason of covid-19.
- rmds not required in 2020. new legislation temporarily waives the requirement to make required minimum distributions (rmds) in 2020 in response to the coronavirus pandemic. whether that distribution is one in a series of rmds or the initial rmd that would be required by april 1 for a taxpayer reaching age 70½ in tax year 2019, no rmd is required.
- qualified birth or adoption distribution. beginning in tax years after december 31, 2019, you can take a distribution from your ira without it being subject to the 10% additional tax for early distributions if that distribution is for a qualified birth or adoption.
- qualified plan loan offsets. a qualified plan loan offset is a type of plan loan offset that meets certain requirements. in order to be a qualified plan loan offset, the loan, at the time of the offset, must be a loan in good standing and the offset must be solely by reason of (1) the termination of the qualified employer plan, or (2) the failure to meet the repayment terms is because the employee has a severance from employment. if you meet the requirements of a qualified plan loan offset, you have until the due date, including extensions, to file your tax return for the tax year in which the offset occurs to roll over the qualified plan loan offset amount. this revision is effective for tax years beginning january 1, 2018.
- modification of required distribution rules for designated beneficiaries. there are new required minimum distribution rules for certain beneficiaries who are designated beneficiaries when the ira owner dies in a tax year beginning after december 31, 2019. all distributions must be made by the end of the 10th year after death, except for distributions made to certain eligible designated beneficiaries.
- required minimum distributions (rmds). for distributions required to be made after december 31, 2019, the age for beginning mandatory distributions is changed to age 72 for ira owners reaching age 70½ after december 31, 2019. the required beginning date for ira owners who haven’t reached age 70½ by the end of 2019 is april 1 of the year following the year of the owner’s 72nd birthday.