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atlong13
New Member

Does a pregnant woman / new mom who quit her job over COVID concerns fall under the "qualified disaster" for early retirement withdrawal?

My wife is a nurse at a nursing home, and gave birth in September of 2020. She left on maternity leave a few weeks earlier than originally planned due to a large COVID19 cluster at her facility that included several employees getting sick.
After giving birth it was decided that for the health of the baby it would be best if she quit work until things were safer to return. To help with the monthly bills she withdrew her retirement early to offset the lack of income.
To clarify, she nor anyone else in our household have ever had a positive COVID19 diagnosis.
1 Best answer

Accepted Solutions
CatinaT1
Employee Tax Expert

Does a pregnant woman / new mom who quit her job over COVID concerns fall under the "qualified disaster" for early retirement withdrawal?

Question 3 in this IRS FAQ lists who is a qualified individual under the Cares Act: Coronavirus Relief

 

Final guidance on this has not been issued, so there may be additional qualifications added.  

 

If you do qualify, you will report this on a Form 8915-E.  The IRS has not yet finalized the Form 8915-E for retirement plan distributions under the CARES act.  So this form cannot be included in the TurboTax program.  You will not be able to proceed until the form is available.

 

The IRS has not communicated when the form will be finalized for inclusion on the 2020 federal tax return.

 

We estimate it will be sometime in February 2021 before the form is available.  You can watch this link for the form availability.  Currently, the form is not listed here since there is no estimated date.  Once there is, you will find the form listed with the date available.  

 

IRS forms availability table for TurboTax individual (personal) tax products

 

Additionally, the IRS will not start processing returns until February 12, so waiting for this form is not slowing down the processing of your return.

 

I'm not sure how much you withdrew.  If you qualify, the Cares act allows for up to $100,000 penalty free.  If this exception does not work for you, there is a new provision this year which allows for you to take up to $5,000 out without penalty for a qualified birth.  This would be entered differently.

 

To enter the exception for the penalty, follow these steps:

  1. Several questions after entering your 1099-R, you will get a screen that says:  Let's see if we can reduce your early withdrawal penalty
  2. Select Continue
  3. Enter $5,000 in the area for Another reason, select Continue
  4. The next screen should remove the penalty.

For the Qualified Birth or Adoption Distributions, the IRS requires you to attach a statement that provides the name, age, and tax id number of the child or eligible adoptee.  Because of this requirement, you will need to paper file your return.

 

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"

View solution in original post

2 Replies
CatinaT1
Employee Tax Expert

Does a pregnant woman / new mom who quit her job over COVID concerns fall under the "qualified disaster" for early retirement withdrawal?

Question 3 in this IRS FAQ lists who is a qualified individual under the Cares Act: Coronavirus Relief

 

Final guidance on this has not been issued, so there may be additional qualifications added.  

 

If you do qualify, you will report this on a Form 8915-E.  The IRS has not yet finalized the Form 8915-E for retirement plan distributions under the CARES act.  So this form cannot be included in the TurboTax program.  You will not be able to proceed until the form is available.

 

The IRS has not communicated when the form will be finalized for inclusion on the 2020 federal tax return.

 

We estimate it will be sometime in February 2021 before the form is available.  You can watch this link for the form availability.  Currently, the form is not listed here since there is no estimated date.  Once there is, you will find the form listed with the date available.  

 

IRS forms availability table for TurboTax individual (personal) tax products

 

Additionally, the IRS will not start processing returns until February 12, so waiting for this form is not slowing down the processing of your return.

 

I'm not sure how much you withdrew.  If you qualify, the Cares act allows for up to $100,000 penalty free.  If this exception does not work for you, there is a new provision this year which allows for you to take up to $5,000 out without penalty for a qualified birth.  This would be entered differently.

 

To enter the exception for the penalty, follow these steps:

  1. Several questions after entering your 1099-R, you will get a screen that says:  Let's see if we can reduce your early withdrawal penalty
  2. Select Continue
  3. Enter $5,000 in the area for Another reason, select Continue
  4. The next screen should remove the penalty.

For the Qualified Birth or Adoption Distributions, the IRS requires you to attach a statement that provides the name, age, and tax id number of the child or eligible adoptee.  Because of this requirement, you will need to paper file your return.

 

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
atlong13
New Member

Does a pregnant woman / new mom who quit her job over COVID concerns fall under the "qualified disaster" for early retirement withdrawal?

Sounds great. Thanks for your help!

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