Why am I getting hit with the 10% penalty for withdrawing my from my 401k? I was laid off because of Covid 19.

[joshuafstr]

I had them take out and pay 10% with the withdraw. There are no options for me to rectify this, what is the deal?

[dmertz]

TurboTax has not yet implemented the ability to report Coronavirus-Related Distributions.  The IRS has not yet released the Form 8915-E needed to do so.  Until they do, entry of the Form 1099-R will result in TurboTax showing the penalty.  Once the ability to report a CRD is implemented in TurboTax you'll need to go back through the entry of the Form 1099-R to indicate that the distribution was a CRD.

[joshuafstr]

• Ok thank you. Do they have any idea on a time frame when they will have the information? End of January perhaps, or mid February?

[macuser_22]

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@joshuafstr wrote:

• Ok thank you. Do they have any idea on a time frame when they will have the information? End of January perhaps, or mid February?

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Nobody knows, other then the IRS and the IRS will not say.   As of now, the form does not even exist - it is still in the draft state at the IRS.  Even after the IRS releases the paper form version, it take several weeks more to write and release the electronic form specifications of the form so e-file providers can program, then the IRS requires end to end testing (both the IRS and providers must program their computers so that they talk to each other) and that takes several week longer.

A few years ago a late form forced those that needed the form to pay any tax owed by April 15 and file for an extension to Oct 15 to file.   The form was finally released in May (after the April filing date).

[joshuafstr]

Good to know thank you. I'll plan on having to pay in then.