@SUBRINA629 wrote:
I followed directions and was able to select withdrawal due to covid, turbo tax said we do qualified for covid-19 exception but then it says "since i didn't use the money for a special situation that qualifies, i have to pay the 10% penalty amount. My Box 7 code was 1L, loan treated as distribution. But the reason was because i was not able to repay loan monthly was due to not being able to work during covid, no money. i don't understand.
Code "L" is a "deemed distribution" that was taken by the plan administrator to pay off a loan and is not eligible for the CARES act repayment or spread of tax over 3 years.
IRS notice https://www.irs.gov/pub/irs-drop/n-20-50.pdf page 6
**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**
