Federal employees and annuitants should be aware of an upcoming deadline. 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.
FSAFEDS 60-Day Limited Period to Make Mid-Year Changes
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. Employees who need to make changes to their FSA accounts should do so no later than close-of-business on Aug. 28, 2020. They should go to https://www.fsafeds.com to make their enrollment changes.
READ: 60-Day Limited Period for FSAFEDS Changes to Existing Elections
Required Minimum Distributions (RMDs) in 2020
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 go to https://www.tsp.gov 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.
READ: Relief for Almost Anyone Wanting to Return Unneeded 2020 Required Minimum Distribution
Edward A. Zurndorfer is a CERTIFIED FINANCIAL PLANNER®, Chartered Life Underwriter, Chartered Financial Consultant, Registered Health Underwriter and Enrolled Agent in Silver Spring, MD. Tax planning, Federal employee benefits, retirement and insurance consulting services offered through EZ Accounting and Financial Services, located at 833 Bromley Street Suite A, Silver Spring, MD 20902-3019