RMD Rollover under CARES

[Gruegen]

A participant received a 2020 RMD on March 1, 2020 (the individual is a terminated, non-5% owner who reached required beginning date many years ago). The CARES Act later waived the RMD for the 2020 year and the participant wishes to repay/roll this RMD back into the qualified plan from which it was distributed within 60 days (or by July 15th pursuant to IRS Notice 2020-23). However, the terms of the qualified plan document only permit incoming rollover by "employees." Since this individual is no longer an "employee," can the individual actually roll over such amount back into the plan as an indirect rollover?

 

 

[Larry Starr]

16 minutes ago, Gruegen said:

A participant received a 2020 RMD on March 1, 2020 (the individual is a terminated, non-5% owner who reached required beginning date many years ago). The CARES Act later waived the RMD for the 2020 year and the participant wishes to repay/roll this RMD back into the qualified plan from which it was distributed within 60 days (or by July 15th pursuant to IRS Notice 2020-23). However, the terms of the qualified plan document only permit incoming rollover by "employees." Since this individual is no longer an "employee," can the individual actually roll over such amount back into the plan as an indirect rollover?

 

 

No.  But he can roll it into an IRA and get the same results.

[Gruegen]

Thanks Larry. 

Let me change the fact pattern. Let's say that the individual receiving RMD's is an actively-employed 5% owner. Further, lets assume that a portion of the RMD is attributable to designated Roth contributions, and that such RMD distribution would be considered a Qualified Roth Distribution. Treasury Regulation 1.402A-1, Q&A-5 states that distributions attributable to designated Roth contributions that includes amounts that would not be taxable if they were distributed to the participant must be made via direct rollover, if rolled to a designated Roth account of qualified Plan. 

Given that this rollover of the Roth RMD would be an indirect rollover, can this rollover be accepted by the plan?