AICPA Calls on IRS to Issue Implementation Guidance on IRAs and Trust Issues

June 19, 2020

Washington, D.C. (June 19, 2020) – The American Institute of CPAs (AICPA) submitted a letter requesting the Department of the Treasury and the Internal Revenue Service (IRS) issue guidance on the coronavirus-related distributions provision (Section 2202) and the required minimum distribution (RMD) waiver provision (Section 2203) in the Coronavirus Aid, Relief and Economic Security (CARES) Act and provisions in the Setting Every Community Up for Retirement Enhancement (SECURE) Act.

Under the CARES Act, taxpayers may repay all or part of the amount of a coronavirus-related distribution to an eligible retirement plan within three years of the date that the distribution was received. If the taxpayer repays a coronavirus-related distribution, the distribution is treated as though it were repaid in a direct trustee-to-trustee transfer and the taxpayer does not owe federal income tax on the distribution. The AICPA recommends Treasury and the IRS provide similar treatment to an inherited IRA.

The CARES Act also provides a temporary waiver (for 2020) of RMD rules for certain retirement plans and accounts. AICPA has requested confirmation that the provision applies to all owner and beneficiary retirement accounts and an allowance of the reversal of the distribution in 2020 if an RMD was taken earlier in 2020. Additionally, the group seeks confirmation that the prior regulations continue to apply and requests additional guidance that is not contemplated by the prior regulations.

Taxpayers and practitioners need guidance with examples in a variety of areas. The AICPA letter provides recommendations on the following issues:

  1. 2020 RMD waiver
  2. 10-year rule
  3. Other trust issues
  4. Coronavirus-related distributions from an inherited IRA
  5. Age of majority
  6. Reporting requirements