COVID-19 retirement distribution

Hare · ‎March 2, 2021

Can I choose how much of the distribution to report as an income in the span of 3 years rather than the 1/3? In another words, can I do 70%, 15% and 15%?

DawnC · ‎March 2, 2021

No, if you use the election to spread the tax, it applies to all covid related distributions and is divided equally over the tax years 2020-2022. And if you don't elect to spread the tax, you pay the full tax on all of it now. However, if you pay all the tax now, and you end up repaying the distribution (or any portion of it) back, you can get a refund of those taxes you previously paid. And you can always apply more of your refund this year to next year's taxes if you want to include more tax this year.

Coronavirus-related relief for retirement plans and IRAs questions and answers

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