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Maciek1980
Level 1

COVID 19 CARES Act 401K Distribution Repayment

Hello,

Back in April 2020, I made withdrawal from my personal 401K account from TD Ameritrade - "COVID 19 distribution." It was from qualifying 401K account and I had qualifying COVID-19 related hardship. My situation has changed and, in January 2021, I decided to pay back the distribution to my 401K account at TD Ameritrade. CARES Act allows people to pay back "COVID 19 distribution" within  3 years so they do not have to pay taxes or simply get refund for paid taxes. I guess it basically extends regular 60 day rollover period to 3 years. That is my understanding. Since I took distribution, TD Ameritrade sent me 1099R Form. I recorded that distribution in Turbotax. My question is where do I  record repayment of that distribution in Turbotax? When I go to rollover section, Turbotax discusses only 60 day rollover. It does not have any information on COVID-19 CARES Act 401K 3 year rollover period.  It is a bit surprising. Thank you for your help,

 

Matt  

2 Replies
Maciek1980
Level 1

COVID 19 CARES Act 401K Distribution Repayment

I already got my response!

DavidD66
Employee Tax Expert

COVID 19 CARES Act 401K Distribution Repayment

Withdrawals from a IRA because you were affected by COVID-19 are not subject to the 10% early withdrawal penalty.  Additionally, the tax on the distribution can be paid over a three year period. 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.  

 

In order to waive the penalty and elect to the option to pay the tax over three years, you will have to complete Form 8915-E, which has not been released by the IRS yet.  If you would like to review a draft copy of the form, click the following link:  Draft, Form 8915-E.  Once the IRS finalizes and releases the form, TurboTax will make it available.  Until then, you'll have to wait to finalize your and file your tax returns.

 

The form has an entry for amounts repaid prior to filing your 2020 tax return.

 

No date has been given by the IRS.  TurboTax will update this section shortly after the IRS releases the final version of form 8915-E and its instructions.

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