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New Member
posted Feb 21, 2021 11:16:49 PM

How do I record my 401k distribution under cares act so I dont get penalized

under cares act you are allowed to withdraw up to 100k from your 401K with no penalty only taxes I believe Turbo Tax is not taking in consideration the no penalty part and is affecting my refund

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2 Replies
Level 10
Feb 22, 2021 5:05:54 AM

See this FAQ. The needed IRS form is not yet ready. The FAQ has expected date and an email signup to be notified when it is ready.

 

https://ttlc.intuit.com/community/tax-topics/help/why-am-i-getting-getting-a-10-penalty-on-my-1099-r-when-i-withdrew-fund-during-covid-form-8915-e/01/1842324

Expert Alumni
Feb 22, 2021 5:07:08 AM

Form 8915-E, that reports the COVID related distribution under CARES Act, isn't ready.

 

The 8915-E Form is projected to be e-fileable starting 02/24/2020. Please sign up here to get notified when Form 8915-E is ready.

 

 

Once the Form 8915-E is live please follow these steps to enter your 1099-R:

  1. Login to your TurboTax Account 
  2. Click on the Search box on the top and type “1099-R”
  3. Click on “Jump to 1099-R” and enter your 1099-R (if you started this before you should see the “Your 1099-R Entries” screen and will click "edit")
  4. Continue until "Tell us if any of these uncommon situations apply" screen
  5. Select "I took out this money because of a qualified disaster (includes COVID-19)" (TurboTax will walk you through questions once this section is ready)

 

 

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 or having work hours reduced because of COVID-19
  • You’re unable to work due to child care closure or hour reduction because of Covid-19
  • You experience adverse financial consequences as a result of closing or reducing hours of a business that you own or operate due to SARS-CoV-2 or COVID-19.

 

You can choose to have the distribution taxed over 2020, 2021, and 2022 instead of only in 2020. You’ll have three years to pay back the funds you withdrew, without the amount impacting that year’s cap on contributions. If you pay back the amount within that time, you’ll be able to claim a refund on those taxes paid when you file an amended tax return. Please see IRS Coronavirus-related relief for retirement plans and IRAs for more details.