August 31, 2020 Deadline for Qualified Plan Actions

Due to the Coronavirus Aid, Relief, and Economic Security Act, also known as the CARES Act, and IRS Notice 2020-51 and 2020-52, there is a deadline of August 31, 2020, to accomplish the following things:

1) Those who took a Required Minimum Distribution (RMD) anytime in 2020 can now put everything back by August 31. Since the one-per-year rollover rule is also waived, those who took multiple RMD payments now qualify. Non-spouse beneficiaries are also eligible for this rollover relief. (Keep in mind that rollovers of RMDs that would otherwise violate the one-per-year rule or are made by non-spouse beneficiaries only qualify for this relief if they are returned to the same IRA from which they were taken.) Going forward, any eligible rollover distributions, including 2020 RMDs, have the usual 60 days to be rolled over. Unwanted 2020 RMDs can still be rolled over after August 31, but relief from the once-per-year rule will be lost. In addition, non-spouse beneficiaries who miss the August 31 deadline will not be allowed to roll the distribution back. These provisions also allow unwanted 2020 401(k) RMDs to be repaid through rollover to an IRA (or company plan) by August 31.

NOTE: If you take advantage of this relief from the one-per-year rule to pay back your RMD(s), then the new one year clock starts on the date of the last rollover completed before August 31. Also note that the one-year clock is 12 months from the start date, not the next calendar year. For example, if you pay back your RMD on August 20, 2020, you cannot do another IRA rollover to or from any IRA account after August 31, 2020 until August 20, 2021. Custodian-to-custodian transfers and Roth conversions are not considered rollovers.

2) Employers are allowed to suspend or reduce safe harbor contributions after March 13, 2020 for the balance of the year, regardless of whether the employer is suffering an economic loss. However, to take advantage of this relief, the employer must adopt a plan amendment suspending or reducing the safe harbor contributions by August 31, 2020.

3) The IRS has postponed the filing due date for Form 5498 (IRA Contribution Information) from July 15, 2020, until August 31, 2020. Due to this change, TD Ameritrade will be publishing all 5498 and 5498-ESA forms for tax year 2019 by August 21, 2020. You as an account holder do not file this form, it is filed with the IRS by the custodian of your account and you will receive a copy from TD Ameritrade.