401 cares withdrawal

[adessolamp5]

i withdrew money from my fidelity 401 k under the cares act.  And if it matters for this question yes,I had covid 19. It was my understanding that if you withdrew under the cares act you would not get a penalty for early withdrawal. however when I placed the amount into turbo tax it does not give me the option for the cares act and says I have to pay the penalty along with the taxes that I pre-paid when i took out the money. Am I missing something?

[AmyC]

Yes, it is too soon for this form. You will not have a penalty. You have a choice of having 1/3 included in your income for 3 years. or the full amount You also have 3 years to repay any of it that you want. 

The IRS has not yet released the 8915E. We don't have it incorporated into the system yet. We are expecting it to be ready for e-file by 2/24. See Federal form availability for expected release dates. Once released, we work to incorporate them quickly.

Form 8915-E: Qualified 2020 Disaster Retirement Plan Distributions and Repayments, which is used for COVID-related early distributions

[adessolamp5]

Hello  has the form 8915E been added to turbo tax yet? if so when i get back into my turbo tax how do i find it?  thank you   Mark

[AmyC]

Form 8915-E is finalized. You can use that form to spread out the income over 3 years, if you were affected by COVID.

To be affected by COVID, you or someone in your house were diagnosed with COVID, you experienced adverse financials consequences as a result of COVID due to ability work, reduced hours and more. See Coronavirus-related relief for retirement plans and IRAs. Most people were affected by COVID. 

The IRS is updating form 5329’s instructions to make it clear that COVID related exceptions cannot use 5329 and should use the new 8915-E.

1. Go back through the program, edit the  1099-R, and mark that you were affected by COVID.
2. You may need to return to the Form 5329 and delete it. See How to Delete   

In addition, you have those 3 years to repay the money to the 401k. So you may be able to repay some of it in the next 2 years and not have to pay the full tax on your distribution.