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cldunn87
Level 2

How do you claim a coronavirus related 401k distribution? I do not see an option while filing to claim this exception, there is just an "Other Reason" field.

 
5 Replies
WendyN2
Level 7

How do you claim a coronavirus related 401k distribution? I do not see an option while filing to claim this exception, there is just an "Other Reason" field.

No, however, if you are affected by Covid-19, you can withdraw up to $100,000 from your 401(k) account without incurring the early withdrawal penalty and you can spread the taxation of the withdrawal over 3 years.

 

However, the Coronavirus-related relief measures for retirement plan distributions have to be reported on form 8915-E which has not yet been finalized by the IRS. No date has been given by the IRS for the finalization of this document.

 

TurboTax will update this section after the IRS releases the final version of form 8915-E and its instructions. Please revisit this section at a later date.

CHW47
Level 2

How do you claim a coronavirus related 401k distribution? I do not see an option while filing to claim this exception, there is just an "Other Reason" field.

I have experienced considerable losses of rental income due to tenants being unemployed due to COVID-19.  In addition to retirement income, I am self-employed in managing rental repertories that I own.  Would this loss of self-employment income due to COVID allow me to treat routine required distributions from 403b abd 457b accounts as coronavirus-related distributions, and return the distributions to those accounts and thereby avoid the taxes I would otherwise pay on them?

DMarkM1
Employee Tax Expert

How do you claim a coronavirus related 401k distribution? I do not see an option while filing to claim this exception, there is just an "Other Reason" field.

As of now, no, the reason you list, "loss of rental income," is not on the list of qualifications for a COVID related distribution.  However, the list is being review for expansion.  See question 3 in this IRS link.  

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CHW47
Level 2

How do you claim a coronavirus related 401k distribution? I do not see an option while filing to claim this exception, there is just an "Other Reason" field.

DMarkM1,

Thank you for your reply and the link.  I agree; I do not see loss of rental income as a qualifying condition on the IRS publications.  However, I have seen "loss of self-employment income" listed as a qualifying condition on the websites of KPMG and other accounting firms -- but not on an IRS publication.  Is it possible that loss of self-employment income will be considered as a qualifying condition, and is rental income considered self-employment income if that is one's only income-generating occupation?

DMarkM1
Employee Tax Expert

How do you claim a coronavirus related 401k distribution? I do not see an option while filing to claim this exception, there is just an "Other Reason" field.

Right now those self-employment conditions relate to the last bullet in the IRS link (a business you own or operate).  This qualification relates to the factors that preclude the income earner from doing something.  Unlike the loss of rental income which is because someone else cannot do something.  This is passive vs non-passive.  

 

I don't like to speculate, but it is possible that the IRS will specifically clarify that a loss of rental income will qualify.  I haven't seen it yet though.    

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