CARES Act exemption for early withdrawal from ROTH IRA

[DieselHybrid]

Married filing jointly.  Since our family was adversely affected by COVID, we withdrew money from our ROTH IRA & TSP accounts respectively to cover bills.  When running Turbotax- the 9% early withdrawal (prior to age 65) penalty is still factored into our taxes.  The CARES Act waived that penalty.  How can we fix this?  Thank you in advance!

[dmertz]

The Form 8915-E required to report these distributions and avoid early-distribution penalties has not yet been released by the IRS and, therefore, has not yet been implemented in TurboTax.  You'll need to wait for the IRS to release the form.

[macuser_22]

That is reported on a new 8915-E form that is not yet available and there is no estimated release date since the form is still in the draft state at the IRS. There is no telling how long it will take the IRS to make the electronic form available. Typical it takes the IRS 2-4 weeks to release the electronic form specifications after the paper version is released. e-file providers must program from the electronic specifications.

The draft paper form is here:

https://www.irs.gov/pub/irs-dft/f8915e--dft.pdf
https://www.irs.gov/pub/irs-dft/i8915e--dft.pdf

Also to see if you qualify for a COVID-19 related distribution see:
https://www.irs.gov/newsroom/coronavirus-related-relief-for-retirement-plans-and-iras-questions-and-...

[ColeenD3]

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. Form 8915 -E is not yet finalized by the IRS.

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.

Ideally, the plan administrator would have used Code 2 in Box 7. Please see the screen shot below.