401k Cares Act withdrawal - 10% withheld tax is 1099R in 2020

[Billyishere71]

Took 80k from 401k during covid. I distributed the tax payments for 3 years.

I just realized that the 8915-E from 2020 divided the 80k to (3) payments of 26.6k. However, my 1099R from Fidelity shows they withheld 10% in federal and state taxes. The money I received was 68.8k after the taxes.

Shouldn't my payments be divided to 22.9k x (3) years?

I checked and everything was entered properly in the turbotax 1099-R

My 1099R shows 80k in box 1 and 2a. 8k federal tax in box 4 and 3.2k state tax withheld. Box 7 shows "1"  -No other boxes are checked. Fidelity told me my 8915-E form will prove that it was for covid-19 so I wouldn't get the 10% early withdrawal penalty.

I feel I have been paying way too much tax on this.  Am I?

[DoninGA]

The taxes withheld on the 2020 Form 1099-R you received were what Fidelity withheld based on their requirements for withholding taxes on a distribution and amount was reported as tax payment on your 2020 tax returns.  It had nothing to do with the 10% early withdrawal penalty.  The penalty, which was not assessed since this was a Covid related withdrawal, would only be assessed on your federal tax return, nowhere else.

You have been reporting your 1/3 of the withdrawal correctly.  It is 1/3 of the gross distribution from box 1 of the 2020 Form 1099-R.  Not 1/3 of the amount you received after taxes in 2020.

[Billyishere71]

Thank you for your quick response. So if I understand correctly, I was not penalized 10%. But where did the money withheld in my 1099-R go? Despite I added the tax withheld information in turbotax, under 401k distributions (1099-R), it is not shown anywhere in my return.

[DoninGA]

On your 2020 Form 1040 the taxes withheld on the Form 1099-R will be entered as a tax payment on Line 25b

[Billyishere71]

Thank you so much!!! I have been doing research on this issue for days!!

I see it now! Thank you again!