The CARES Act of 2020 allowed taxpayers who were subject to Required Minimum Distributions (“RMD”s) from their retirement accounts to waive those distributions for the 2020 tax year.
In July of 2020, the IRS issued a notice that taxpayers who had already taken their RMDs - either before CARES was enacted or after - could redeposit them into their retirement accounts before August 31, 2020 to avoid being taxed on those distributions.
2020 tax forms issued for the transactions are confusing. Taxpayers receive a Form 1099-R, as usual, with the distributions reported in Boxes 1 and 2a. Box 2b reports “taxable amount not determined”. There is no reference to the redeposited amount.
The redeposited amounts are reported as “rollover” contributions on Form 5498, which is the IRA Contribution Information form. Fidelity Investments issued Form 5498 in January. Unfortunately, Schwab and TD Ameritrade have said that they will issue Form 5498 in May, after the tax filing deadline.
If you redeposited an RMD in 2020 you should provide both Forms 1099-R AND 5498 to your tax preparer. If you did not receive Form 5498, you should notify your tax preparer and provide the monthly statement which reports the redeposited amounts.
Please do not hesitate to contact Parkside Advisors if you have any questions.