Why is a COVID related pension withdraw included in my AGI? This was an emergency and now am being penalized and won't receive a stimulus? This makes no sense to me?

Qualified 2020 Disaster Retirement Plan Distributions are reported on IRS Form 8915-E.

Are you able to elect to report the taxable income from the distribution over three years?  Or does even the one-third put you over the AGI limits that you are referring to?

See IRS Coronvirus Relief for Retirement Plans and IRAs under Coronavirus-related distributions from workplace retirement plans and IRAs.

Taxes on distributions: 

Coronavirus-related distributions:

• Are included in taxable income
  • Over a three-year period, one-third each year, or
  • If elected, in the year you take the distribution.
• Are not subject to the 10% additional tax on early distributions (including the 25% additional tax on certain SIMPLE IRA distributions) that may otherwise apply to most withdrawals before age 59 ½
• Are not subject to mandatory tax withholding, and
• May be repaid to an IRA or workplace retirement plan within three years, if eligible for tax-free rollover treatment.  

Correct, I did not pay additional tax or penalties on the distribution, but it’s still counted in AGI calculation which now puts me over the 160,000 maximum so now I’m disqualified for stimulus because of this .  Is this correct.  We actually made less money in 2020 than previous years without the distribution.   

I got screwed also.  I took from my 401k after I retired to buy a house and fix up.  Shud have waiting to file my 2020 taxes also.  Blame the SENATOR FROM WEST VIRGINA. AND THE REPLICANS LOWERD FROM 200000