2020 RMD reclassified as Coronavirus-related Distribuiton

[B21]

The CARES Act specifically states that a Coronavirus Related Distribution is any distribution taken between January 1, 2020 - December 31, 2020. Therefore, if an individual received his/her 2020 RMD in January & has missed the 60-day rollover deadline, can the RMD be reclassified as a CRD if the individual becomes an affected individual for CRD purposes even though not an affected individual at the time the RMD was received. I've seen interpretations of this rule that a CRD has to be received from March 27, 2020 - December 31, 2020.

[RatherBeGolfing]

1 hour ago, B21 said:

The CARES Act specifically states that a Coronavirus Related Distribution is any distribution taken between January 1, 2020 - December 31, 2020. Therefore, if an individual received his/her 2020 RMD in January & has missed the 60-day rollover deadline, can the RMD be reclassified as a CRD if the individual becomes an affected individual for CRD purposes even though not an affected individual at the time the RMD was received. I've seen interpretations of this rule that a CRD has to be received from March 27, 2020 - December 31, 2020.

If all the other qualifications are met, it is a CRD.  Not sure why you would interpret it as March 27 and forward when the Act says "on or after January 1, 2020, and before December 31, 2020"

[Peter Gulia]

A payer tax-reports a distribution (and withholds taxes from it) based on what the plan's administrator directed before the payer paid.

A distributee's tax treatment of a distribution is between the distributee and the tax authorities.

[B21]

Below is an excerpt from Wolters Kluwer (CCH):

To qualify as a coronavirus-related distribution, the distribution must be from an eligible retirement plan made on or after the date of the enactment of the CARES Act and before December 31, 2020. In addition, it must:

• be made to an individual 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;

• whose spouse or dependent is diagnosed with such virus or disease by such a test, or

• who experiences adverse financial consequences as a result the coronavirus.

 

This is what caused my confusion because I also agree that any distribution made during 2020 can potentially be classified as a CRD.

[RatherBeGolfing]

2 minutes ago, B21 said:

Below is an excerpt from Wolters Kluwer (CCH):

To qualify as a coronavirus-related distribution, the distribution must be from an eligible retirement plan made on or after the date of the enactment of the CARES Act and before December 31, 2020. In addition, it must:

• be made to an individual 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;

• whose spouse or dependent is diagnosed with such virus or disease by such a test, or

• who experiences adverse financial consequences as a result the coronavirus.

 

This is what caused my confusion because I also agree that any distribution made during 2020 can potentially be classified as a CRD.

What source from WK/CCH are you referring to?  I am looking at a WK summary right now that  states "provided the distribution is made on or after January 1, 2020 and before December 31, 2020"

 

[B21]

It's listed under "Topic-Federal Covid-19 (Coronavirus)Responses

[Kevin C]

Are the references saying CRD's start March 27 referring to the new distributable event rather than the tax changes?  I don't see an effective date for the section that added the new distributable event.  It makes sense to me that the new distributable event would not be available until the law was signed.  Until guidance is issued, all we have to go by is a reasonable good faith interpretation of the new law. The Act is clear that the tax treatment applies retroactively to 1/1/2020.

[RatherBeGolfing]

1 hour ago, Kevin C said:

Are the references saying CRD's start March 27 referring to the new distributable event rather than the tax changes?

Good catch.  I bet that is it because I have seen both CCH and WK documents referring to 1/1