topic 401k COVID distribution in State tax filing

401k COVID distribution

dawnmarie50 — Tue, 06 Apr 2021 15:55:28 GMT

Can I spread the taxes I owe on my 401K distribution for CARES ACT over 3 years for my Minnesota State Taxes. Turbo Tax program is not allowing me to do this.

Re: 401k COVID distribution

ErnieS0 — Tue, 06 Apr 2021 18:50:09 GMT

You are correct. At this time, Minnesota does not follow federal law in allowing you to spread a CARES Act related distribution over three years.

Minnesota says, "The American Rescue Plan Act was signed into U.S. law on March 11, 2021. We're analyzing how this law may impact Minnesota taxes and watching for possible state law changes."

Re: 401k COVID distribution

Kylobudda — Sat, 10 Apr 2021 20:14:10 GMT

Does that mean in Minnesota we should pay taxes on100% on the distribution in year #1?

Re: 401k COVID distribution

JoannaB2 — Mon, 12 Apr 2021 01:18:43 GMT

No. Minnesota did not conform to the 2020 Corona-virus related 401 K distribution. The 2020 Corona-virus related 401 withdrawal is fully taxable in Minnesota. You may still spread the distribution on your 2020 Federal income tax return for 3 years beginning tax year 2021.

See, minnesota law change faq 2020, link