Qualified 2020 Disaster Retirement Plan Distribution (Coronavirus)

[judyard-74]

Hello

I have a client that took a 401 K  distribution for Coronavirus.  Payroll told him that the Coronavirus distribution(s) aren't subject to the additional 10% tax on early distribution.  

How would I go about filling out Form 8915-E.

Any help will be appreciated

Judy Ard

[qbteachmt]

@judyard-74 

Did you put your License into your Internet topic? I suggest you edit that info out.

[IntuitCharlene]

This article shows you how to generate the 8915-E in ProSeries:

https://proconnect.intuit.com/community/retirement-tax-credits-and-deductions/help/generating-form-8...

I have also edited your post to remove the identification number at the bottom for your privacy. Thank you. 

[RNeilson]

First off download the instruction for the form from the IRS.  It will give you more clarification.  As you complete the form you will see how excludes the penalty.  However they need to realize that they are having to repay the distributions in thirds starting with the 2020 tax return.  They will still be subject to income tax on the portion they claim and repay for each year.

[qbteachmt]

It doesn't have to be repaid; that's a CARES Act Provision, not a requirement.

If the distribution is taxable, the 8915-E includes the option to pay the tax on the full amount in 2020 or to defer that into thirds.

If you repay any of it in 2012 or 2022, the repayment amount would be applied starting with the 2020 taxable amount and allocating it to each amount you reported and paid tax on already (these will be tax years you amend, after the fact) because you are no longer required to be taxed on that amount. The covid disaster declaration includes the three-year window as if that is a rollover provision.

This is a different provision than the waiver of the 10% early distribution penalty.