RMD repaid in 2020

[Retired-still-working]

I know I'm missing something simple....I have a client who took his RMD and paid it back in full when the CARES act came into being.  He had Federal and State withholding taken out, but repaid the entire gross distribution.  If I enter the info on the 1099-R worksheet and mark that it is disaster related AND repaid in full, the system still taxes 1/3 of the distribution.  Client received no distribution due to the repayment, so nothing should show up on line 4a or 4b of the 1040.  What box am I neglecting to check?  Any ideas?

[rbynaker · Accepted solution]

Treat it as an indirect rollover.  No 8915E required.  Just old-school rollover rules.

[qbteachmt]

"and paid it back in full when the CARES act came into being."

By August 31? The 60-day limit was extended, but not to year end.

"In addition to the rollover opportunity, an IRA owner or beneficiary who has already received a distribution from an IRA of an amount that would have been an RMD in 2020 can repay the distribution to the IRA by August 31, 2020. The notice provides that this repayment is not subject to the one rollover per 12-month period limitation and the restriction on rollovers for inherited IRAs."

"If I enter the info on the 1099-R worksheet and mark that it is disaster related"

The distribution is not disaster-related.

The provision to repay certain RMD is part of CARES Act.

"The CARES Act provisions apply to most retirement plans, including traditional IRAs, SEP IRAs, SIMPLE IRAs, 401(k) plans, 403(b) plans, 457(b) plans, profit sharing plans and other defined contribution plans. The RMD suspension doesn't apply to qualified defined benefit plans."