COVID relief 401k early withdrawal

[Sth91]

In December 2020, I withdrew money from my 401 due to the pandemic. In preparing my taxes in TurboTax, I discovered that the withdrawal was underrated and that I owed. I was given the option of paying the undertaxed amount in three yearly installments (so the first was paid last year in 2021 for 2020- automatically deducted from my refund). My question is this: now that I'm preparing my 2021 taxes, knowing that I still have two thirds of that amount to pay back, how do I access that in TurboTax? Nothing is showing up for repayment. Should I be receiving a new 1099-r? Should I re-enter 2020's 1099-r this year and next year until it is paid? Very confused, and any info will be greatly appreciated.

[MinhT1 · Accepted solution]

You will not get another form 1099-R this year.

You will report the second taxable portion of your 2020 coronavirus distribution in the Retirement section under Wages and Income of TurboTax.

However, this section is not yet ready as the IRS has not yet issued instructions for form 8915-F and you'll need to revisit this section later.

Please read this TurboTax Help topic on form 8915-F.

At this time, we do not know when the IRS will finalize form 8915-F as it is still in draft form as of February 2, 2022.

[jh2k]

On TurboTax 2021, I wanted to work on the second of a three-year distribution penalty exemption due to COVID-19, but as of today, update is still not available. Any news? Thanks.

[DianeW777]

Great news! The IRS created new Form 8915-F to replace Form 8915-E.  This form will be used for anyone who chose to take a distribution from their retirement and spread the taxable amount over three years.

It was recently (approximately 10 days) taken out of draft and finalized.  TurboTax has an available date of March 24, 2022.  Continue to check the availability date by using the link provided.

• When will federal forms be available?
• What is Form 8915-F?

When entering your 1099-R in TurboTax CD/Download, you’ll be asked Was this withdraw due to Covid-19? On the next screen, it should ask you Did you test positive for the coronavirus in 2020? However, some users are reporting they aren’t being asked that second question.

We’re working to resolve this issue. If you’d like to receive progress status updates, sign up here.

[Shortick1]

Thanks for getting the updated form 8915-F out in the tool a bit earlier than expected!  Once you update the form for 2021 and you do federal review you will be asked to review the 1099-R section.  The tool is looking for a new 1099-R from 2021.  Given in my particular instance I took out a covid withdrawal in 2020 so I would not be getting a new 1099-R for 2021.  To fix this go tax tools-----> tools------->other helpful links----> delete a form.  Scroll down until you see the 1099-R form for 2021 and delete it.    This fixes the issue and you can file without a review popping up to add the 2021 1099-R.  Hope this helps everyone else that has this happen!

[kjblack]

I came to the page “Have you ever taken a disaster distribution before 2021”. Clicked Yes and continue. Then I brings me to a page that is already filled out with my 1/3 payment, but when I click continue nothing happens to my refund and doesn’t show up in the withdrawal section. Can someone walk me through how this is supposed to work?

[Shortick1]

Hi KJ,

I did not have that happen on mine.  It asked me to add information from my 2020 form 8915-E from specific lines vs pre filled in.  You might want to call TurboTax for help- they were really good and helpful with my issue as described above and it only took 5 minutes for a call back.  Good luck!

[DianeW777]

The following steps should be used to enter your COVID qualifying distribution.  Do Not enter a FEMA code because this doesn't have one. You must have your Form 8915-E from your 2020 tax return.

1. Wages & Income > Retirement Plans and Social Security > 
2. IRA, 401(k), Pension Plan Withdrawals (1099-R) >  Start, Revisit or Update > Continue
3. Answer Yes  'Have you ever taken a disaster distribution before 2021?
4. Answer Yes, You had a 2020 Qualified Disaster Distribution
5. Complete the Information using your 2020 Tax return > Continue
6. Enter any amount you may have repaid in 2021, if applicable
7. Finish the entry for your spouse if applicable or just click Continue
8. Complete any additional retirement questions as you move through this section
9. Continue until you have finished and returned back to the Wages & Income Screen.
10. Do NOT stop and change sections without completing it.

[Shortick1]

Thank you Diane!  Super helpful!

[kjblack]

Where will it be located once it's added. I keep going through the steps, but it's not showing in my Plan Withdrawal section in the Income portion

[gweingart]

After completing with the steps above, it is not calculating the amount properly. It still shows I have a 10% penalty and is not using the 1/3 dispersant amount. 

[DoninGA]

---

@gweingart wrote:

After completing with the steps above, it is not calculating the amount properly. It still shows I have a 10% penalty and is not using the 1/3 dispersant amount. 

---

If you did not receive a Form 1099-R for 2021, then delete the Form 1099-R you entered.  And where asked if you received a Form 1099-R answer NO.

[gweingart]

Yes, but when doing that, the 1/3 of the distribution I “should” see for 2021 is not showing up.

E.g.: in the Retirement Plans and SS section, I *think* I should be seeing 1/3 of the distribution I took in 2020, no? 

[DoninGA]

---

@gweingart wrote:

Yes, but when doing that, the 1/3 of the distribution I “should” see for 2021 is not showing up.

E.g.: in the Retirement Plans and SS section, I *think* I should be seeing 1/3 of the distribution I took in 2020, no? 

---

When you completed the screen as shown in the following screenshot the amount you entered for either the 2020 Form 8915-E, Line 9 or the 2020 Form 8915-E, Line 17 will flow to your 2021 Form 1040 Line 4b or 5b.

[gweingart]

OK-the tax is now correct, however, getting this error upon running the Smart Check: