Cares act - no penalty on early withdrawal from 401K

[Buddy100]

Company told client that the early withdrawal would have no 10% penalty, however they put a code 1.

How do you report no penalty in this situation?

[IRonMaN]

5329

8915E

Maybe tomorrow afternoon.

[Buddy100]

Thanks.  I have searched for a 8915-E and couldn't find it in Pro Series.  I will keep watching for it.  

[TaxGuyBill]

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@Buddy100 wrote:

Company told client that the early withdrawal would have no 10% penalty

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There is no penalty IF the taxpayer QUALIFIES.  The taxpayer needs to be a qualified person in order for it it be a Covid-related distribution.

[mslatinos]

Apparently, this form is not available under Pro series Basic which I find it odd as it should be available as it is part of regular return filing. You shouldn't have to purchase an upgrade to get access to this and other forms from the IRS.

[IRonMaN]

It's listed under Basic as being ready tomorrow like it is in the Professional version.

[athaureaux6 · Accepted solution]

Hi, you do not need the 8915E for that. Just go to Form 5329, Look for worksheet Distributions not subject to additional taxes, look for Letter L, Other , type the amount of the distribution in the space provided, you will that PS writes a code 12 on Line 12 and waives the 10% penalty. If you look for instructions in the IRS website for Form 5329 , code 12 is reserved for all Coronavirus related distributions. Maybe 8915E will be another way and also to split the distribution which can also be counter productive. Thank you. 

[qbteachmt]

Form 5329 is for the penalty waiver due to disaster qualification.

Form 8915-E (T or S) is for the taxable amount being reported and taxed over three years, or you elect to have this reported and taxed all in this year; that's why you use the 8915-E.

[Buddy100]

Thanks. I did not know the purpose of the 8915-E.  

[Buddy100]

Thank you so much.  I did just that and it works.  Thanks.