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Becky K
New Member

covid ira distribution question

Hi. I used the COVID IRA distribution clause in my 2020 taxes.  I understand I have 3 years to pay it back.  I am confused on how to pay it back.  There were no guidelines on this at the time.  Thoughts?

5 Replies
BettieG
Employee Tax Expert

covid ira distribution question

Hi @Becky K!  Thanks for your question.  In short, you can repay the distrubution by transferring the funds to your the retirement plan which distributed them to you.  

 

In general, yes, you may repay all or part of the amount of a coronavirus-related distribution to an eligible retirement plan, provided that you complete the repayment within three years after the date that the distribution was received. If you repay a coronavirus-related distribution, the distribution will be treated as though it were repaid in a direct trustee-to-trustee transfer so that you do not owe federal income tax on the distribution.

If, for example, you receive a coronavirus-related distribution in 2020, you choose to include the distribution amount in income over a 3-year period (2020, 2021, and 2022), and you choose to repay the full amount to an eligible retirement plan in 2022, you may file amended federal income tax returns for 2020 and 2021 to claim a refund of the tax attributable to the amount of the distribution that you included in income for those years, and you will not be required to include any amount in income in 2022.

 

I hope this is helpful!  If so, please give me a thumbs up!

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JandKit
Employee Tax Expert

covid ira distribution question

Hi,

I make the assumption that you completed the 2020 tax return correctly. If you did, there should be a form 8915-E included. This form is used to calculate and track your payments. In 2021, this form was revised and became the 8915-F. It is still used for the purpose of calculating and tracking your payback for the original distribution. This form would have been included in the 2021 and 2022 tax reurns.

If my assumption is incorrect, and you did not include the original 8915-E in the 2020 tax return. We can assist you in making the necessary corrections to insure accuracy going forward.

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Holly W1
Employee Tax Expert

covid ira distribution question

Hello Becky K,

 

We are so happy you joined us today!  

 

From what I am understanding, you took a distribution from your IRA due to COVID in 2020 and your are interested in repaying it.  You are correct that you have up to 3 years to pay it back.  You would contact either your employer if it was through a plan at work, or the financial institution where the IRA funded through.  

After you make the payment, you will want to amend your tax return(s) to report that you paid it back to claim a refund of the tax attributable to the amount of the distribution that you included in income for those year(s) you claimed it as income.  https://www.irs.gov/newsroom/coronavirus-related-relief-for-retirement-plans-and-iras-questions-and-... .  

If you completed your taxes with TurboTax and need to amend your prior years, feel free to reach out to one of agents for assistance, they are always happy to help!

Thanks again for joining us today!



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Becky K
New Member

covid ira distribution question

ok - I found the 8915-E I originally submitted.  For some reason, I thought I had through 2023 to repay this back. It appears I missed the deadline to repay this amount.  What happens now?  Any way to recover? Or is it too late?

covid ira distribution question


@Becky K wrote:

. It appears I missed the deadline to repay this amount.  What happens now?  Any way to recover? Or is it too late?


 

You have three years from the date of the distribution.  Did you take the distribution before 6/29/20?  If so, you are right, you missed the deadline and can not recontribute the funds.  If your distribution was after 6/28/20, you still have time to make the recontribution.

 

If you missed the deadline, you keep it as it is, and your 2020, 2021 and 2022 tax returns each tax 1/3 of the distribution.

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