IRS Clarifies More Time to Contribute to IRAs, HSAs, Qualified Plans in 2020

The recently announced extension of income tax filing deadlines will also give you more time to contribute to an IRA or health savings account, and for employers to make contributions to their retirement plans—but not to take excess deferrals out of the plan.

The Treasury Department and the Internal Revenue Service (IRS) had, in Notice 2020-18, announced special federal income tax return filing and payment relief in response to the Coronavirus pandemic. 

Now they have provided some answers to frequently asked questions related to the relief provided in the Notice—good news for retirement savers and employers alike. Specifically:

Q17. Does this relief provide me more time to contribute money to my IRA for 2019?

A17. Yes. Because the due date for filing Federal income tax returns has been postponed to July 15, the deadline for making contributions to your IRA for 2019 is also extended to July 15, 2020. 

Q19. I made excess elective deferrals to my workplace-based retirement plan in 2019. Do I have to take those excess deferrals (and income) out of the retirement plan no later than April 15, 2020, in order to exclude the distributions from income?

A19. Yes, because that date is not also extended as a result of this relief.

Q20. For employers with a federal income tax return due date of April 15, 2020, is the end of the grace period under section 404(a)(6) to make contributions to their qualified retirement plans on account of 2019 also July 15, 2020 as a result of this relief?

A20. Yes, because these employers are Affected Taxpayers under Notice 2020-18 for whom the due date for filing Federal income tax returns and making Federal income tax payments that would be due April 15, 2020, is now July 15, 2020, the end of the grace period for these employers is also July 15, 2020 under this relief. 

Q21. Does this relief provide me more time to contribute money to my HSA or Archer MSA for 2019?

A21. Yes. Contributions may be made to your HSA or Archer MSA, for a particular year, at any time during the year or by the due date for filing your return for that year. Because the due date for filing Federal income tax returns is now July 15, 2020, under this relief, you may make contributions to your HSA or Archer MSA for 2019 at any time up to July 15, 2020. 

The remainder of the FAQs can be accessed online at https://www.irs.gov/newsroom/filing-and-payment-deadlines-questions-and-answers.