How do I claim a 1099-R from a Cares Act 401k withdrawal? I do not see an option to spread it over three years as the IRS site claims.

Form 8915 -E is not yet finalized by the IRS. When it is, you can finish your distribution information.

Those who qualify as individuals directly impacted by the pandemic will be able to withdraw up to $100k from their retirement accounts without facing the 10% early withdrawal penalty.

You qualify if:

• You, your spouse, or your dependent are diagnosed with COVID-19
• You experience adverse financial consequences as a result of being quarantined, furloughed, or laid off
• You had work hours reduced to COVID-19
• You’re unable to work due to child care closure or hour reduction

The distribution would be taxed over 2020, 2021, and 2022. 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.

If a payor is treating the payment as a coronavirus-related distribution and no other appropriate code applies, the payor is permitted to use distribution code 2 (early distribution, exception applies) in box 7 of Form 1099-R.

Thank you! Does the IRS have an idea of when the form will be ready?  Would this require additional paperwork from T-Rowe Price? Or an update to Turbo-Tax?

No additional paperwork will be needed from T-Rowe Price.

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 am following this feed but I have an additional question...I had excessive medical expenses this year due to being on COBRA after furlough/elimination of my job so that is one reason that I made the withdrawal. When I answer the questions on the 401 K early withdrawal section of Turbo Tax, it tells me that I do not have to pay taxes since the withdrawal is used for medical expenses. I already payed 20% when I withdrew the funds. I assume this is added to my tax contributions for the year. Will I still have to pay this back in 3 years or pay taxes later?

Thanks for clarifying!

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.

On the 1099 form we received it shows code 1, so reading what shows on the initial question, does that mean that we can change the code to '2'? Or do we do that on the form 8915?

No, do not change the code - leave it as a 1.   When the form is ready, TurboTax will be updated to apply the tax relief to your Form 1099-R as it is.   All you have to do is enter the form as is and wait until the update occurs.   Then you will go in and answer the questions about the distribution being due to covid and Turbo Tax will take care of the rest.  @vsage87

My 401K wouldn't allow or approve COVID/hardship withdrawls.  I pulled money out an used most of it for medical bills, but not all (Not good, I know).  I was unfortunately issued a 1099-R with a distribution code 1.

I got hit with the 20% withdrawl penalty at the time of withdrawl which I accept.  Now the 10% early withdrawl penalty is being assessed on my taxes, though the taxable amount has been reduced with what I spent on medical bills (but not dollar for dollar).

However, can I spread the 10% penalty tax amount out over three (3) years?  How do I do this?

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.

Please sign-up here and we will email you once the form is live.

so you do not put this on form 1099R at all, just complete the info on the 8915-E?  When I fill it out on the 1099R then the 8915-E it doubles the withdrawal amount

@laurie9699

As employees, we received this update today, 

Form 8915-E: Qualified 2020 Disaster Retirement Plan Distributions and Repayments, which is used for COVID-related early distributions, will be e-fileable starting 2/24.

The IRS is updating form 5329’s instructions to make it clear that COVID related exceptions cannot use 5329 and should use the new 8915-E.

If you go to the IRS site, you see the word draft beside the form. It is not available yet. Once the IRS, hopefully, releases it on 2/24, then we can work to incorporate it into the program quickly.

Can we get an update on this -  the IRS is now accepting returns, how can this not be available?

The IRS just started accepting returns today.   However, they are not accepting returns with Form 8915-E included yet.   They are finalizing the forms now.   Once finalized, the form has to be coded for electronic processing and tested before the IRS will approve a vendor's (TurboTax) use of the form for electronic processing.     The form is tentatively scheduled to be released around 02/24.    Form 8915-E is not the only form that is not ready.   Anyone the uses a form that has not been finalized cannot e-file until their forms are all finalized.    @Gcdfranklin

Is form 8915-E now available in TurboTax?

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@Avo Deukmejian wrote:

Is form 8915-E now available in TurboTax?

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The Form 8915-E is scheduled to be available in TurboTax on 02/24/2021

Form 8915-E is available on the IRS website, thanks for confirming TurboTax be updated to include this on the 24th.  Question, how do I confirm TurboTax is not including the 10% early withdrawal fee?  It would help to be able to view the total taxes owed on the withdrawal, tax bracket percentage rate and no withdrawal fee.

In reviewing your return, if you do not see an amount 1040, line 23, then the 10% early withdrawal penalty would have been waived through the 8915-E.  If your withdrawal is a qualified coronavirus related withdrawal, the 8915-E will be used for penalty relief from early retirement plan distributions and include the option to spread the distribution income over 3 years.  This may be a good option if the distribution is pushing you into a higher marginal tax bracket.  You may end up paying less tax if you spread the distribution over the 3 years.  TurboTax will have series of screens dedicated to the 8915-E.  Penalty relief will be included in those screens.  Normally, the penalty for early distribution from a retirement plan is reported on the form 5329.  This form total flows to 1040 Sch 2 Line 6 and the total of Sch 2 flows to 1040 Line 23. There are also other taxes that flow to the Sch 2 so if you do see an amount on 1040 line 23, review Sch 2 to identify what that amount represents.

Today is 2/24. I just tried this and its not on here yet.

It was said The Form 8915-E is scheduled to be available in TurboTax on 02/24/2021. I just tried and its not here yet. ETA?

Thanks

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@pogono82 wrote:

Today is 2/24. I just tried this and its not on here yet.

 

 

It was said The Form 8915-E is scheduled to be available in TurboTax on 02/24/2021. I just tried and its not here yet. ETA?

Thanks

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Form 8915-E, Qualified 2020 Disaster Retirement Plan Distributions and Repayments is scheduled to be available in TurboTax on 02/25/2021

Go to this website for IRS forms availability in TurboTax - https://care-cdn.prodsupportsite.a.intuit.com/forms-availability/turbotax_fed_online_individual.html

My company's 401k provider (Fidelity) did not and does not intend on providing a 1099-R for my COVID-related distribution. I don't have all the info to fill out the forms in TurboTax, but I do know that nothing was taken out of the distribution. Can I just provide that amount and ignore questions like "Distribution Codes"? Thx!

If you are not receiving a 1099-R, then you took a loan from your 401K, not a distribution.   401K loans do not need to be reported on your tax return (unless you default on the loan).  @pricequester

Thank you for the response, but it certainly was a distribution. Seems like I need to contact Fidelity.

Yes, if they recorded it as a loan that needs to be corrected. In fact, as a distribution, there is a substitute form you can use, the form 4852.

The form 4852 is a last resort. This is what the form says:

 If you don’t receive the missing or corrected form from your employer or payer by the end of February, you may call the IRS at 800-829-1040 for assistance. You must provide your name, address (including ZIP code), phone number, social security number, and dates of employment. You must also provide your employer’s or payer’s name, address (including ZIP code), and phone number. The IRS will contact your employer or payer and request the missing form.

Because of this, you cannot e-file a return with a 4852, it must be mailed in.

First off, it's not just the penalty, it's a higher tax rate as well.  Secondly, the form has been filed now and still not fixed on the download version.  Please update.