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IRS Notice 2020-51, released last week, provides additional guidance on the waiver in 2020 of required minimum distributions (RMDs) from defined contribution retirement plans and IRAs, and the interaction of this waiver with Section 114 of the SECURE Act. The SECURE Act changed the required beginning date for an employee or IRA owner to begin taking required minimum distributions to April 1 of the calendar year following the calendar year in which the individual attains age 72 (rather than April 1 of the calendar year following the calendar year in which the individual attains age 70½), for individuals who attain age 70½ after December 31, 2019.

The Notice clarifies that the 2020 suspension also applies to individuals with a 2019 RMD who have a required beginning date of April 1, 2020, that was not paid in 2019 (and therefore would have been due to be paid between January 1, 2020 and April 1, 2020). In April, the IRS issued a notice that said those who took an RMD between February 1 and May 15 could put the money back into a plan or IRA by July 15. The new guidance expands the relief to include those who took an RMD between January 1 and February 1, and also extends the deadline for rolling the funds back into a plan or IRA to August 31. For example, if a participant received a single-sum distribution in January 2020, part of which was treated as ineligible for rollover because it was considered an RMD, that participant will have until August 31, 2020, to roll over that part of the distribution.

The Notice also provides relief for beneficiaries. Ordinarily, a non-spouse beneficiary must elect to take a distribution paid on account of a participant’s death within five years after the date of death, or begin payments over the beneficiary’s life expectancy, with the election to be made before the end of the calendar year following the year of the participant’s death. Under the CARES Act, a plan can provide that the year 2020 will not count as a year for purposes of the five-year measurement period. The Notice clarifies that consistent with this change, a plan can be amended to provide that the period for a non-spouse beneficiary to elect a rollover that otherwise would have been required by the end of 2020 can be extended to the end of 2021.

In another clarification, an employee who has a required beginning date of April 1, 2021 need not take a distribution for 2020 by April 1, 2021. For example, if an employee who is not a 5% owner attained age 70½ before January 1, 2020, and retires in the 2020 calendar year, that employee’s required beginning date is April 1, 2021. The Notice states the employee is not required to receive an RMD for 2020 before April 1, 2021, but must still receive the RMD for the 2021 calendar year by December 31, 2021.

The Notice also contains a sample amendment for a defined contribution plan to implement the changes applicable to RMDs. The deadline for amendment adoption is the last day of the first plan year beginning on or after January 1, 2022 (or January 1, 2024, for governmental plans).