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New Member

Is the government waving the federal taxes on covid 401k disbursements?

 
4 Replies
Level 15

Is the government waving the federal taxes on covid 401k disbursements?

No.  Only the 10% penalty for early withdrawal.  Withdrawals from qualified retirement plans are always subject to regular income tax. 

*Answers are correct to the best of my ability at the time of posting but do not constitute legal or tax advice.*
Level 15

Is the government waving the federal taxes on covid 401k disbursements?

The IRS has a new Form 8915-E for COVID-19 related retirement account withdrawals.  This form has not been finalized by the IRS for filing with a 2020 federal tax return.  The IRS has not announced when this form will be available.  Once available it will be included in the TurboTax software.  It is estimated that the form may be available sometime in February.

New Member

Is the government waving the federal taxes on covid 401k disbursements?

What does this form accomplish? The refund of the 10% penalty?

Level 15

Is the government waving the federal taxes on covid 401k disbursements?


@megsage wrote:

What does this form accomplish? The refund of the 10% penalty?


Yes, and also you have the option of spreading the income out over 3 years instead of paying the tax all at once.  If you plan to certify that your withdrawal was covid-related, you need to wait for this form. 

*Answers are correct to the best of my ability at the time of posting but do not constitute legal or tax advice.*
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