Question

401K withdrawals

Forum|Forum|5 years ago
February 3, 2021
1 reply
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Retired and I withdrew money from my 401k account in February 2020. Then we found out that no withdrawal was needed in 2020 because of the Cares Act. In June 2020 we added/redeposited the exact amount into a retirement account. An attempt to ZERO OUT the original withdrawal. Turbo tax indicated that the deposit was not legal as we had no income in 2020 and therefore not a legal deduction. . What should I do which will enable me to have a net effect of zero for the withdrawal and redeposit?

Thank you, Bud Gorski [phone number removed]

DMarkM1

In the "Retirement Income" topic when entering the Forms1099-R, if you meet the qualifications below, you will select the box "I took this money out for a qualified disaster (includes COVID-19)" in the follow on questions. There you will be able to enter payback information.

Currently the Forms 8915 for this situation have not been approved. The estimated implementation is 2/18/2021. Here is a link to monitor for forms updates in TurboTax.

The distribution was made to a qualified individual. A qualified individual meets at least one of the following characteristics:

You, your spouse, and/or dependent was diagnosed with the virus SARS-CoV-2 or with coronavirus disease 2019 (collectively referred to as coronavirus) by a CDC-approved test
You, your spouse, and/or a member of your household (anyone who shares your main home) experience unfavorable financial consequences as a result of one of the following occurring due to coronavirus:
- Begin quarantined, furloughed, laid-off or experiencing a reduction in work hours
- Unable to work due to lack of childcare,
- Closed or reduced hours of a business you owned or operated,
- Reduced pay or self-employment income
- Job offer rescinded, or
- Job start date delayed

[edited 2/3/2021 11:31am]

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