1099R Covid Distribution

[southerngirlz24]

My friend received a 1099R with a code 7 in box 7, normal distribution.   I keep seeing on here it has to be a "1 or 2" in box 7 to qualify.   She had covid last year and ended up retiring.  Does she qualify for the 1099R relief?  She wants to spread the amount out over 3 years.  

[ColeenD3]

Yes.

Those who qualify as individuals directly impacted by the pandemic will be able to withdraw up to $100k from their retirement accounts without facing the 10% early withdrawal penalty.

You qualify if:

• You, your spouse, or your dependent are diagnosed with COVID-19
• You experience adverse financial consequences as a result of being quarantined, furloughed, or laid off
• You had work hours reduced to COVID-19
• You’re unable to work due to child care closure or hour reduction

The distribution would be taxed over 2020, 2021, and 2022. You’ll have that time to pay back the funds you withdrew, without the amount impacting that year’s cap on contributions, and if you pay back the amount within that time, you’ll be able to claim a refund on those taxes.