IRA distribution and Cares Act

Forum|Forum|5 years ago
February 28, 2021
11 replies
65 views

Under the cares act I withdrew $100k, but my employer held back $5k for state income tax. I rolled over $95k to another IRA. When I go through all of the questions in turbotax, I am now getting a penalty on the $5k for federal and state income tax. Shouldn't I have the option to now roll that money back into my IRA after I get it back from the state without taking the penalty? I had no choice in the $5k being held back, and now I'm getting penalized for it. That doesn't seem right. Any help on how I should approach this, or how to handle this in TurboTax so I am not penalized.

user17630861524

Level 2

If you made a withdrawal from your employer's qualified plan (like a 401k), you should have received a form 1099-R. In box 14 it should show your $5K as State Tax Withheld. If it was Federal withholding, then the amount would be in box 4. If you did not receive a form 1099-R, contact your employer or whoever manages the employer's plan and request a duplicate.

cc1790-70Author

Level 2

Yes, I received a 1099R with that info, but that doesn't change the way you have to enter it into TurboTax. It is still showing that I have a penalty to pay for the $5k that was withheld for state taxes, since I was only able to roll over $95k instead of the full $100k.