401-K Cares act distribution

Forum|Forum|5 years ago
February 9, 2021
10 replies
48 views

TP who is under 59 1/2 and not meeting any exception for a code 2 in box 7 received a 1099-R from her employer's 401-K trustee with code 2 in box 7.

At the time of the distribution TP informed the trustee that she was taking the distribution per the cares act and the trustee used code 2 in Box 7.

I'm thinking I should be good to go without any need for form 8915-E since their is not a penalty to waive

Would that Assumption be generally accepted or would a corrected 1099-R be MORE correct?

Thanks for any input.

ProSeries Basic

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Best answer by qbteachmt

The 8915-E is for the Election to take the income as taxable in the year distributed or not.

"Generally, a qualified 2020 disaster distribution is included in your income in equal amounts over 3 years. However, if you elect, you can include the entire distribution in your income in the year of the distribution."

That doesn't control the 10% early distribution penalty.

Perhaps you meant Form 5329?

qbteachmtAnswer

Level 15

The 8915-E is for the Election to take the income as taxable in the year distributed or not.

"Generally, a qualified 2020 disaster distribution is included in your income in equal amounts over 3 years. However, if you elect, you can include the entire distribution in your income in the year of the distribution."

That doesn't control the 10% early distribution penalty.

Perhaps you meant Form 5329?

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Camp1040Author

Level 10

I did not realize that "little" distinction. TP does not want to elect the 3 yr option, so since we have a code 2; no penalty. I will file without 8915-E.

Thanks for the quick reply.