When the stock market dropped like a rock in March, the government generously waived required minimum distributions (RMDs) for the rest of the year. That was designed to save you from having to sell stocks at a low point to take money of your IRA/401k accounts. At the time, this move unintentionally disadvantaged people who had already taken their RMDs earlier in the year.
The IRS has now issued a rule that allows anyone to undo their 2020 RMD by depositing that money back into their retirement account by August 31st. Why would you want to do that? It could make sense if you have a high-income year and want to reduce your taxes. Or maybe you found it much harder to spend money with all the travel restrictions. If you do not need the money, you could put it back and then do a Roth conversion.
Then again, maybe you took your RMD in January and you are content with that. The main thing is you have options. It’s not every day the government lets you take a mulligan.
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