By Ian Berger, JD
IRA Analyst

Many of you may have already received, or may be receiving, an RMD (required minimum distribution) from your employer plan this year. If the CARES Act waived 2020 RMDs from plans and IRAs this year, how could a company plan be making RMD payments? The answer is a little complicated.

Under the tax code, plans are allowed to force participants to receive a distribution without their consent at a certain age. For most plans, that is age 65. The CARES Act did not change that rule. So, plans are legally permitted to pay out RMDs at age 70 ½ or later – even in 2020. Plans may be continuing to pay RMDs to avoid modifying their procedures for processing distributions just for this year.

But even if your employer’s plan pays you an amount equal to your 2020 RMD, you are allowed to treat it for tax purposes as if it’s not an RMD. That’s where the CARES Act waiver comes into play. Normally RMDs can’t be rolled over. But the amount you receive in 2020 is not technically considered an RMD for tax purposes. So, if you don’t want the “RMD,” you can roll it over to an IRA (or another company plan that accepts it) to avoid immediate taxes. Or, you can pay taxes on the RMD and roll it over (convert it) to a Roth IRA for tax-free growth.

Under Notice 2020-51, a rollover made by August 31, 2020 does not have to be completed within 60 days. But you will have to act quickly to meet that deadline! If the August 31 deadline is missed, you can still roll over the RMD, but you’ll have to comply with the 60-day rule. (If doing an IRA-to-IRA, or Roth IRA-to-Roth IRA, rollover after August 31, you’d also have to comply with the one-rollover-per-year rule. But plan-to-IRA rollovers aren’t subject to that rule.)

Some employer plans that are paying out 2020 RMDs have adopted rules that allow you to choose not to receive an RMD. In some cases, the plan will force an RMD payment unless you elect to opt out. In other cases, the plan won’t pay out the RMD unless you say that you want it. If you are due an RMD and have not already received it, you should contact your plan administrator or HR staff to see what the plan is doing.

You can normally bypass the 60-day deadline by doing a direct rollover from your plan to an IRA. However, plans aren’t required to offer a direct rollover option for 2020 RMDs. Again, check to see how your plan is handling this.

Finally, if you receive an RMD from your plan this year and don’t do a direct rollover, you can decide how much federal income tax withholding you want. Even though the RMD is eligible for rollover, the plan is not allowed to automatically withhold 20% for taxes.

Ready To Take



For more information about any of our products and services, schedule a meeting today.

Or give us a call at (803) 242-1050

Investment advisory services offered through Foundations Investment Advisors, LLC (“Foundations”), an SEC registered investment adviser. Nothing on this website constitutes investment, legal or tax advice, nor that any performance data or any recommendation that any particular security, portfolio of securities, transaction, investment or planning strategy is suitable for any specific person. Personal investment advice can only be rendered after the engagement of Foundations, execution of required documentation, and receipt of required disclosures. Investments in securities involve the risk of loss. Any past performance is no guarantee of future results. Advisory services are only offered to clients or prospective clients where Foundations and its advisors are properly licensed or exempted. For more information, please go to and search by our firm name or by our CRD #175083.

 ADV Part 2A & Form CRS              Privacy Policy             Form CRS