Cares Act 401k withdrawal - Pay Back Question

Forum|Forum|5 years ago
April 24, 2021
35 replies
184 views

Has anyone seen guidance on what counts as paying back the Cares Act 401k withdrawal.

For Example lets say I took out 40k for the cares act from my 401k in 2020.

I want to pay it back now but I also have 10k in 401k loans (Pre CARES Withdrawal). Can I just pay back 30k and pay off my 10k 401k loan? Does that qualify as paying all 40k back? I have not filed my 2020 tax form yet.

macuser_22

Alumni - Champ

Paying a loan is specifically excluded as a payback. A payback must go onto a qualified retirement plan.

**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.**

alton987Author

Level 2

Thanks, do you know if normal 401k contributions count toward repayment?

DanaB27

Employee Tax Expert

No, normal 401k contributions would not count toward the repayment since contributions are coming out of your pre-tax wages and are reducing your tax.

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DanaB27

Employee Tax Expert

No, paying back your 401k loan doesn't count towards paying back the CARES 401k withdrawal.

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terencenewman

Level 2

I took a 2020 CARES ACT IRA Loan for $100,000 in 2020. I took 1/3 or b$ 333,333 as a Deduction for my IRA on 2020 1040_SR and agreed to take it out for 3 years.

I paid off the Loan at end of 2021 and did a Rollover deposit of $100,000 back into my IRA.

Turbo TAX is ADDING $33,333 to my 2021 RMD even though I have Paid off the CARES Loan. I tried to answer NO to the Question "Did you take a CARES Distribution in 2020". Neither Yes nor No hand any effect on Turbo Tax ADDING the $33,000 to my 2021 RMD.

Turbo TAX also said it had NO FORMS to process for CARES repayments in 2021 as of 3/18/2021, even though their Add for the PREMIER Version said it was INCLUDED in 2021 Premier Version.

How do I STOP the $33,333 being ADDED to my RMD and WHEN will Premier Turbo TAX handle CARES repayments ?????