Repaying COVID-19-related distribution to my 401k after plan withholding

[findchris]

Hey @DaveF1006 - One last question.  I'm not clear on how your advice interplays with Form 8915-F.  Assuming I'm amending my 2020 return (the year in which I took the distribution), would I complete Form 8915-F?

As far as amending, I'm going through the steps you provided, and hit a wall at step 9: "Tell us if you moved the money through a rollover or conversion".  I'm in my 1099-R, and just see the form.  If I walk through the TurboTax wizard on this form, I get to a question that asks, "Did XXX repay any of this distribution?"  Is this where I'd change (amend) my answer from "repaid none" to "repaid all"?  I toy with this, and that doesn't seem to give me the expected refund.

I appreciate your help, as I've had such trouble tracking down guidance here!

[findchris]

Tagging @DanaB27 too - thanks!

[fanfare]

@findchris 

There is absolutely no requirement to amend your 2020 tax return

when you are paying any amount back in 2022 before you file your 2021 tax return,

unless you are paying back more than 2/3rds, e.g. 100%.

For amounts 2/3rds or less,

Put it all on your 2021 tax return.

[fanfare]

If you pay back 100%, as you said you wanted to do,

pay back $100,000 before you file your 2021 tax return.

You amend your 2020 tax return ; meanwhile on your 2021 tax return you will enter an amount paid back of 100,000, resulting in zero remaining and zero tax due.

[findchris]

@fanfare That helps, thanks.  I do intend to pay back 100% of the borrowed amount.  As such, you are saying amending 2020 is required, which I've planned on.  Do I also need to complete Form 8915-F?

As for amending, can you provide specific TurboTax instructions?  As far as amending, I'm going through the steps Dave provided, and hit a wall at step 9: "Tell us if you moved the money through a rollover or conversion".  I'm in my 1099-R, and just see the form.  If I walk through the TurboTax wizard on this form, I get to a question that asks, "Did XXX repay any of this distribution?"  Is this where I'd change (amend) my answer from "repaid none" to "repaid all"?  I toy with this, and that doesn't seem to give me the expected refund.

Final question:  Once I complete the amendment, will I get the withheld $35,200 returned to me?  This amount was withheld from my original $100k withdrawal, and if I'm paying back the full $100k (and not just the $64,800 I ended up with after withholding), I'd assume this would come back to be as a refund.  Is that accurate?  I guess the alternative would be for me to pay back $64,800, but the consensus seems to be that I pay back the full $100k.

Thank you so much for guiding me through this chaos!

[fanfare]

@findchris 

When you amend the only form you have to attach to your 1040-X is Form 8915-E ( not the revised 1040 ).
It should show on Line 10  an amount paid back of $100,000. That will match your form 5498 sent later.
This results in an "amount subject to tax in 2020" of zero.

You can't expect all your withholding back.
You only get back the tax you paid on $33,333.

The rest of what you paid back 66,667 is applicable to your 2021 tax return,
Form 8915-F Line 14, which you will have to enter yourself, 
and which also results in an "amount subject to tax in 2021" of zero. see worksheet 3.

[fanfare]

[minor edits to above]

[findchris]

This is super helpful @fanfare - thank you!

Can you clarify, "You can't expect all your withholding back"?  I would definitely expect to get these funds back somehow.  Here's why:

- 401k has 100k, which I borrow, leaving $0 in my 401k

- There is withholding on that 100k, so I ultimately received $64,800

- Now I'm paying it back, which I have to pay in full at 100k.

- My 401k is now fully repaid to 100k

- However, that original withholding (~$35,200) is still with the IRS, which I've now repaid, so I'd expect it to be refunded to me.

What am I missing?

[fanfare]

what am I missing?

Read my answer above again.

[fanfare]

it's still not clear what you did in 2020.

Did you divide by 3.0, or not ??

Divide by3.0 is the default action.

[findchris]

Thanks @fanfare - where can I find this on my 2020 return?  I think I did the default action, but I'll double check.  How does that change what I do and/or implications for getting my withholding back?

  Anyway, I never saw the $100k I requested from my 401k, because of the ~$35k withholding.  I just want to make sure I get that back (since I'm repaying the full $100k).

[findchris]

Hey @fanfare @DaveF1006 - Just a final ping as we're completing the 2021 return right now.

Where can I find if I divided by 3.0 on my 2020 return?

Also, I'd appreciate clarity on why I wouldn't get my 2020 withholding refunded to me:

- 401k has 100k, which I borrow, leaving $0 in my 401k

- I (regretfully) elected for 32% withholding on that 100k, so I ultimately received $64,800

- Now I'm paying it back, which I have to pay in full at 100k.

- My 401k is now fully repaid to 100k

- However, that original withholding (~$35,200) is still with the IRS, which I've now repaid, so I'd expect it to be refunded to me.

I can't thank you enough for sharing your wisdom.

[DianeW777]

The information about whether you chose to divide your distribution by three in 2020 can be found on your Form 8915-E that should be included with your 2020 tax return file.

If you did not choose this option you should see the full amount as taxable on your 2020 Form 1040.

@findchris

[fanfare]

Since you paid back 100% of your distribution,

you must amend your 2020 tax return, whether you did or did not spread over three years.

Until you answer the question, there's no point commenting further,

By the way, the action required for all scenarios, I already put in my previous replies.

I also answered your withholding question.

[fanfare]

@findchris 

"Just a final ping as we're completing the 2021 return right now."

????

Don't file 2021 until you know what your amended 2020 tax return will say.