SEP Distribution 2023 Covid allowance ? Age 70

[wrjerden]

Hello.  Age 70.   In 2022 I contracted Covid and lost substantial income.  We mistakenly withdrew a large sum from our SEP IRA .  Now realizing we have to pay substantial taxes in 2023.   HELP !   William.

[dmertz]

Not sure what help you need.  There is nothing you can do now to change that tax consequences of having received this distribution.  Enter the Form 1099-R into TurboTax, answer the questions that TurboTax asks and TurboTax will include the taxable amount on Form 1040 line 4b.

[Opus 17]

There are no special rules for COVID-related withdrawals in 2022.  You simply pay the income tax on the amount you withdrew. Because you are over age 59-1/2, there is no additional penalty for early withdrawal but you are stuck with the income taxes.  If you withdrew more than you need, you can invest it in a regular broker account to earn some money.

(You can't re-deposit it in an IRA if more than 60 days have passed.  You can make new tax deductible contributions to an IRA at any age, but only up to the amount of your compensation from performing work.)