Edward A. Zurndorfer
Federal employees and annuitants are reminded of an upcoming deadline affecting some employees and annuitants. The deadline has come about as a result of the COVID-19 pandemic. The following is a short discussion of what is involved with the August 31, 2020 deadline.
- To assist the nation’s response to the COVID-19 pandemic, OPM is permitting employees who participate in the FSAFEDS program a 60-day limited period during which certain mid-year changes can be made to their 2020 Health Care Flexible Spending Account (HCFSA), Limited Expense Health Care Flexible Spending Account (LEX HCFSA) and/or Dependent Care Flexible Spending Account (DCFSA). Current year FSA participants are allowed to increase or decrease the amount of their annual election in each FSA account in which they are enrolled. The 60-day period started July 1, 2020 and will end August 31, 2020. Employees who need to make changes to their FSA accounts should do so no later than close-of-business on August 28, 2020. They should go here to make their enrollment changes.
- The CARES Act enabled any individual with a Required Minimum Distribution (RMD) due in 2020 from a defined contribution plan – this includes the TSP, 401(k) or 403(b) plan – or from a traditional IRA, to skip their RMDs for 2020. This includes any individual who became age 70.5 during 2019 and would have had to take their first RMD by April 1, 2020 from any of these retirement accounts. The IRS is allowing anyone who previously took an RMD sometime in 2020 from these retirement accounts to rollback these funds and thereby avoid taxation on the RMD. But this “rollback” must be completed by Aug. 31, 2020. Affected TSP annuitants who previously received 2020 TSP RMDs should here to learn more about this rollback and how to do it.
An IRA owner or beneficiary who has already received a distribution from an IRA of an amount that would have been an RMD any time in 2020 can repay the distribution to the IRA by August 31, 2020. This repayment is not subject to the one rollover per 12-month period limitation.
Also, the restriction on rollovers for inherited IRAs is also waived. This means an IRA beneficiary who received an RMD from an inherited IRA (and who is ordinarily not allowed to roll it back) is allowed to roll it back to the inherited IRA by Aug. 31, 2020, thereby avoiding any tax due in the case of an inherited traditional IRA.
Edward A. Zurndorfer is a Certified Financial Planner, Chartered Life Underwriter, Chartered Financial Consultant, Chartered Federal Employee Benefits Consultant, Certified Employees Benefits Specialist and IRS Enrolled Agent in Silver Spring, MD. Tax planning, Federal employee benefits, retirement and insurance consulting services offered through EZ Accounting and Financial Services, and EZ Federal Benefits Seminars, located at 833 Bromley Street – Suite A, Silver Spring, MD 20902-3019 and telephone number 301-681-1652. Raymond James is not affiliated with and does not endorse the opinions or services of Edward A. Zurndorfer or EZ Accounting and Financial Services. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. While the employees of Serving Those Who Serve are familiar with the tax provisions of the issues presented herein, as Financial Advisors of RJFS, we are not qualified to render advice on tax or legal matters. You should discuss tax or legal matters with the appropriate professional.