1099R form for 401k withdrawal. This was for a qualifying COVID-19 circumstance, but so far it is showing 10% early withdrawal penalty. What do i need to do?

[MinhT1 · Accepted solution]

If you ate affected by Covid-19, your 401(k) distribution is exempted from the 10% early withdrawal penalty.

However, the Coronavirus-related relief measures for retirement plan distributions have to be reported on form 8915-E which has not yet been finalized by the IRS. No date has been given by the IRS for the finalization of this document.

TurboTax will update this section after the IRS releases the final version of form 8915-E and its instructions. Please revisit this section at a later date.

[Nyreemarie]

Hi,

So does this mean I need to wait to file my taxes? Turbo Tax will not allow for e-file, but the prompts will allow for me to print and mail in return.

[Irene2805]

Form 8915-E is available in both the CD/Download and online versions of TurboTax.  If you are using the online version or after you have updated the CD/Download version be sure to go back through the 1099-R section in the federal return. 

In the screens following the 1099-R entry screen:

• You will see a series of questions to see if you are exempt from the additional taxes on early withdrawals [Screenshot #1, below]; and 
• You will be asked if you want to pay all the tax this year of just 1/3, with the rest reported over the next two years. [Screenshot #2]  Check the box if want to pay tax on the entire retirement distribution in 2020.
• If you do not check the box, 1/3 of the distribution will appear on line 4b (IRAs) or 5b (Pensions & Annuities).  1/3 will appear on your 2021 return and 1/3 on your 2022 return.

Keep in mind that all your withholding and estimated payments for 2020 will appear on your 2020 return.

Please make sure your version of TurboTax is up-to-date. 

In TurboTax CD/Download, you will be prompted to download any updates available when you open the program.  You can also update the program while you have it open by following these steps:

1. Click on the Online link in the black bar at the top of the page.
2. Click on Check for Updates.
3. TurboTax will download and install any updates available.  If there aren't any updates, you will receive the message "Your software is up to date."

TurboTax Online automatically updates the website when the forms become available.

@Nyreemarie

[diesel19914]

 I just completed a tax return and went to file and it was rejected with a message that they were awaiting more information.  When I clicked on the more information button I received the following message...  "Pensions/Annuity/IRA Worksheet.  Taxable Pens/IRA/Reg Dist) We are still working on updates related to retirement distributions that qualify for disaster or Covid relief.  You can keep working on your return and we will remove this message when it's ready."

  This has to do with a IRA withdrawal due to COVID and reduction in pay.  The amount is fully taxable but the penalty is waived due to COVID.  

Any help would be appreciated.  How long will update take? etc.  I am prompted tp print and sent to IRS but will take 4-6 weeks!!!!!!!!!!!!!

[mesquitebean]

---

@ diesel19914  wrote:

 I just completed a tax return and went to file and it was rejected with a message that they were awaiting more information.  When I clicked on the more information button I received the following message...  "Pensions/Annuity/IRA Worksheet.  Taxable Pens/IRA/Reg Dist) We are still working on updates related to retirement distributions that qualify for disaster or Covid relief.  You can keep working on your return and we will remove this message when it's ready."

  This has to do with a IRA withdrawal due to COVID and reduction in pay.  The amount is fully taxable but the penalty is waived due to COVID.  

Any help would be appreciated.  How long will update take? etc.  I am prompted tp print and sent to IRS but will take 4-6 weeks!!!!!!!!!!!!!

---

Was it a rejection after efiling, or a "check this entry" message preventing you from actually efiling?   And was that message for a Federal or a state return?   I know several states are having known state return issues with Form 8915-E and are being worked on.  I think I saw in other threads NY, HI, and MI, and possibly others. 

I saw this FAQ suggesting that the Form 8915-E info may not yet be fully incorporated into all state returns yet.

https://ttlc.intuit.com/community/state-tax-forms/help/why-am-i-getting-a-check-this-entry-message-b...

I'm a fellow user, and that's pretty much all I know about it, but I'll see if someone familiar with the retirement income topic can comment any further.

@ dmertz  Do you know anything specific about this issue?

In the meantime, if you haven't already done so, if you are using desktop software (CD/download), be sure you retrieve the latest program updates.   Online TurboTax should update automatically.

[dmertz]

I'm not aware of any issues like this as long as the latest version of 2020 TurboTax is being used.  However, there has been at least one other case (unrelated to Form 8915-E) where Intuit has blocked e-filing by rejecting when they discover a significant problem after having released a particular form for filing, so they might have done the same thing in this instance for some reason.

[diesel19914]

It was a rejection after EFiling.  The penalty was eliminated after answering the 1099R Covid questions.  When I Efiled it said waiting for updates.  Continue completing your return and Turbotax will eliminate the message automatically when update received.  Didn't say it was federal or state related.

Thanks for the reply!

[mesquitebean]

---

@ diesel19914 wrote:

It was a rejection after EFiling.  The penalty was eliminated after answering the 1099R Covid questions.  When I Efiled it said waiting for updates.  Continue completing your return and Turbotax will eliminate the message automatically when update received.  Didn't say it was federal or state related.

Thanks for the reply!

---

As I mentioned above, if you are using the desktop product, be sure to run the program updates.  If using Online TurboTax, it should update automatically when that issue is resolved.

You can phone TurboTax Support for further help with that issue and to further advise you.  They can tell you if your issue is the same one mentioned in the FAQ I provided above, and which I've posted again here:

https://ttlc.intuit.com/community/state-tax-forms/help/why-am-i-getting-a-check-this-entry-message-b...

They may be able to tell you specifically if your state is one of the states still having the issue mentioned in the FAQ.   It sounds like there are some states that TurboTax developers are still working on in regard to handling the Form 8915-E information that flows from the Federal return, and that state returns with that issue may not be ready to efile until after March 19.

Hours are 5AM-9PM Pacific (8AM-12 Midnight Eastern) 7 days/week.

You can use this contact form to get a phone number:

https://support.turbotax.intuit.com/contact