Is TurboTax going to support a Cares Act withdrawal from a 401k?

Yes, However, the IRS has not yet released the form for doing that, so please be patient..

Yes, TurboTax will support all the Cares Act's relief measures for retirement distributions.

 

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.

 

Thank you. 

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.

Hi,  I found the 8915-E form in my forms on my Turbo Tax Deluxe program ,but it doesn't work into the program. Will the updated features be coming out  this week?

Bkos

The form is working.  You may need to delete the 1099R with the covid distribution then re-add it, if it was added before the update.  You can go to forms mode and select the 1099R in the left hand margin, then select Forms in the top margin and delete.  Go back to Step by Step and re-enter or import the 1099R.  You should see a series of question screens regarding the distribution.  You can review your entries in Forms mode, selecting the 1099R, then scrolling down to the disaster relief section.  

 

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.