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We withdrew money out of my husbands 401k in 2020 due to financial hardship from me losing my job. My job loss was due to Covid. I was under the assumption with the Cares Act, we would not be penalize

 
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2 Replies
SamS1
Expert Alumni

We withdrew money out of my husbands 401k in 2020 due to financial hardship from me losing my job. My job loss was due to Covid. I was under the assumption with the Cares Act, we would not be penalize

You are correct.  The form 8915-E will deal with the Cares Act retirement distribution exclusions and has not been released by the IRS.  We do not anticipate this form being completed and released until mid-February.  After you enter your retirement plan distribution in the 1099R screen then continue, you will see a screen for "Uncommon Situations".  The first box relates to natural disasters, including Covis-19.  Once that box is active, you will be able to enter your 2020 pandemic retirement distribution information.

 

Here are the rules regarding exclusion for early retirement distributions under the Cares Act:

  • You are diagnosed with the SARS-Cov2.
  • You are a spouse or a dependent of a person diagnosed with the virus.
  • You experienced financial hardship related to the virus.
  • Test must be done with an approved Center for Disease Control and Prevention.

You would appear to qualify under the 3rd bullet point.

 

Click here for more information on how the Pandemic has affected your taxes.

We withdrew money out of my husbands 401k in 2020 due to financial hardship from me losing my job. My job loss was due to Covid. I was under the assumption with the Cares Act, we would not be penalize

Thank you so much for the clarification! I will wait and watch for the form before I file! 

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