Withdrawals from a IRA because you were affected by COVID-19 are not subject to the 10% early withdrawal penalty. Additionally, the tax on the distribution can be paid over a three year period. You’ll have that time to pay back the funds you withdrew, without the amount impacting that year’s cap on contributions, and if you pay back the amount within that time, you’ll be able to claim a refund on those taxes.
In order to waive the penalty and elect to the option to pay the tax over three years, you will have to complete Form 8915-E, which has not been released by the IRS yet. If you would like to review a draft copy of the form, click the following link: Draft, Form 8915-E. Once the IRS finalizes and releases the form, TurboTax will make it available. Until then, you'll have to wait to finalize your and file your tax returns.
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