401k loan distribution & covid relief

[Goatgirl]

I was laid off in 2020 while I had an outstanding 401k loan. As finding new employment took longer than expected due to Covid, the loan was distributed as a withdrawal. On my 2020 taxes, I paid the full taxes and penalty due rather than spreading over three years, but I did say that the distribution was covered under the CARES Act with the intent of paying back the distribution.  If I pay this money back in whole or part to a qualified plan now, can I recoup the taxes paid by amending my 2020 return (or some other way)? I have been told recently that a loan distribution will not count as a hardship under the CARES Act but I do not see any documentation stating that.  TIA

[fanfare]

"I did say that the distribution was covered under the CARES Act"

Where in TurboTax does it let you say that a 401k loan is covered under the CARES Act?

[dmertz]

This should have been performed as an offset distribution, not a deemed distribution, so as long as the 2020 Form 1099-R did not include code L in box 7 (it should probably have code M) you can recoup the taxes by amending your 2020 tax return to recoup the taxes paid on the distribution after making the repayment.   (Since you reported it as a CRD, there would have been no penalty.)  You can do that when amending with 2020 TurboTax by indicating that the distribution was rolled over and filing the resulting Form 1040-X with its explanation.  As far as I know, no other forms needed.

[Goatgirl]

It didn't say the 401k loan was covered, but you can say that the 401k distribution was due to Covid in the section where you enter the 1099 for the distribution. This was on the 2020 form. 

[AmyC]

With the COVID distribution,  you haven until the end of this year to repay as much as possible then amend your 2020 return.