Question

How do I claim a 1099-R from a Cares Act 401k withdrawal? I do not see an option to spread it over three years as the IRS site claims.

Forum|Forum|5 years ago
January 26, 2021
7 replies
0 views

I took money out of 401k, and they took 10% out for taxes already. However when I claim this income my refund is greatly reduced. Checking on the IRS site claims it can be spread over three years, however there is no entry I can find in Turbo Tax to accommodate this option

TurboTax Online

ColeenD3

Form 8915 -E is not yet finalized by the IRS. When it is, you can finish your distribution information.

Those who qualify as individuals directly impacted by the pandemic will be able to withdraw up to $100k from their retirement accounts without facing the 10% early withdrawal penalty.

You qualify if:

You, your spouse, or your dependent are diagnosed with COVID-19
You experience adverse financial consequences as a result of being quarantined, furloughed, or laid off
You had work hours reduced to COVID-19
You’re unable to work due to child care closure or hour reduction

The distribution would be taxed over 2020, 2021, and 2022. You’ll have that time to pay back the funds you withdrew, without the amount impacting that year’s cap on contributions, and if you pay back the amount within that time, you’ll be able to claim a refund on those taxes.

If a payor is treating the payment as a coronavirus-related distribution and no other appropriate code applies, the payor is permitted to use distribution code 2 (early distribution, exception applies) in box 7 of Form 1099-R.

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greg_bernettAuthor

Thank you! Does the IRS have an idea of when the form will be ready? Would this require additional paperwork from T-Rowe Price? Or an update to Turbo-Tax?

CatinaT1

No additional paperwork will be needed from T-Rowe Price.

The IRS has not communicated when the form will be finalized for inclusion on the 2020 federal tax return.

We estimate it will be sometime in February 2021 before the form is available. You can watch this link for the form availability. Currently, the form is not listed here since there is no estimated date. Once there is, you will find the form listed with the date available.

IRS forms availability table for TurboTax individual (personal) tax products

Additionally, the IRS will not start processing returns until February 12, so waiting for this form is not slowing down the processing of your return.

**Say "Thanks" by clicking the thumb icon in a post**Mark the post that answers your question by clicking on "Mark as Best Answer"

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larajen

I am following this feed but I have an additional question...I had excessive medical expenses this year due to being on COBRA after furlough/elimination of my job so that is one reason that I made the withdrawal. When I answer the questions on the 401 K early withdrawal section of Turbo Tax, it tells me that I do not have to pay taxes since the withdrawal is used for medical expenses. I already payed 20% when I withdrew the funds. I assume this is added to my tax contributions for the year. Will I still have to pay this back in 3 years or pay taxes later?

Thanks for clarifying!

CatinaT1

You will report this on a Form 8915-E. The IRS has not yet finalized the Form 8915-E for retirement plan distributions under the CARES act. So this form cannot be included in the TurboTax program. You will not be able to proceed until the form is available.

The IRS has not communicated when the form will be finalized for inclusion on the 2020 federal tax return.

We estimate it will be sometime in February 2021 before the form is available. You can watch this link for the form availability. Currently, the form is not listed here since there is no estimated date. Once there is, you will find the form listed with the date available.

IRS forms availability table for TurboTax individual (personal) tax products

Additionally, the IRS will not start processing returns until February 12, so waiting for this form is not slowing down the processing of your return.

**Say "Thanks" by clicking the thumb icon in a post**Mark the post that answers your question by clicking on "Mark as Best Answer"

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WellieBoots

My 401K wouldn't allow or approve COVID/hardship withdrawls. I pulled money out an used most of it for medical bills, but not all (Not good, I know). I was unfortunately issued a 1099-R with a distribution code 1.

I got hit with the 20% withdrawl penalty at the time of withdrawl which I accept. Now the 10% early withdrawl penalty is being assessed on my taxes, though the taxable amount has been reduced with what I spent on medical bills (but not dollar for dollar).

However, can I spread the 10% penalty tax amount out over three (3) years? How do I do this?

CatinaT1

You will report this on a Form 8915-E. The IRS has not yet finalized the Form 8915-E for retirement plan distributions under the CARES act. So this form cannot be included in the TurboTax program. You will not be able to proceed until the form is available.

The IRS has not communicated when the form will be finalized for inclusion on the 2020 federal tax return.

We estimate it will be sometime in February 2021 before the form is available. You can watch this link for the form availability. Currently, the form is not listed here since there is no estimated date. Once there is, you will find the form listed with the date available.

IRS forms availability table for TurboTax individual (personal) tax products

Additionally, the IRS will not start processing returns until February 12, so waiting for this form is not slowing down the processing of your return.

Please sign-up here and we will email you once the form is live.

**Say "Thanks" by clicking the thumb icon in a post**Mark the post that answers your question by clicking on "Mark as Best Answer"

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laurie9699

so you do not put this on form 1099R at all, just complete the info on the 8915-E? When I fill it out on the 1099R then the 8915-E it doubles the withdrawal amount

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nicollejoy

First off, it's not just the penalty, it's a higher tax rate as well. Secondly, the form has been filed now and still not fixed on the download version. Please update.

DoninGA

Employee

@nicollejoy wrote:

First off, it's not just the penalty, it's a higher tax rate as well. Secondly, the form has been filed now and still not fixed on the download version. Please update.

Answered in your other post here - https://ttlc.intuit.com/community/retirement/discussion/re-why-does-turbotax-apply-a-penalty-for-qualified-coronavirus-related-401k-distributions-i-too/01/2059313#M138864

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BJ69

Have you updated form to spread 401k withdrawal over three years?

DoninGA

Employee

@BJ69 wrote:

Have you updated form to spread 401k withdrawal over three years?

All the TurboTax editions were updated with the Form 8915-E on 02/26/2021. Once the Covid-19 questions are answered the option to spread the withdrawal over 3 years or to include the entire withdrawal on the 2020 tax return will be available.

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ojolly2

I do not find a 1099-R in my TurboTax. I have the form but place to file it.

ColeenD3

You'll get a 1099-R if you received $10 or more from a retirement plan. Here's how to enter your 1099-R in TurboTax:

Open (continue) return if you don't already have it open.
Inside TurboTax, search for 1099-R and select the Jump to link in the search results.
Answer Yes on the Did you get a 1099-R? screen.
- If you land on the Your 1099-R Entries screen instead, select Add Another 1099-R.
Select which option matches your form and Continue.
You can import your form directly from your financial institution by searching or selecting yours from one of the options on the screen. You'll be prompted to enter your financial institution account information, and TurboTax will directly import your forms.
- If you prefer to type it in yourself, select Change how I enter my form and continue through.

You can add up to 20 1099-Rs.

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peter1770

Hi, I took out a coronavirus-related 401k early distribution in 2020 under the CARES ACT and decided to spread the taxes over 3 tears. What steps do I follow when filling my 2021 taxes on Turbo Tax to report this 401k distribution? I know when filing my taxes in 2020 I had to submit Form 8915-E. Does this form need to be submitted again in 2021?

DoninGA

Employee

@peter1770 wrote:

Hi, I took out a coronavirus-related 401k early distribution in 2020 under the CARES ACT and decided to spread the taxes over 3 tears. What steps do I follow when filling my 2021 taxes on Turbo Tax to report this 401k distribution? I know when filing my taxes in 2020 I had to submit Form 8915-E. Does this form need to be submitted again in 2021?

There is a new IRS Form 8915-F that is used for this purpose. The IRS has not yet finalized the form or the instructions for the form. It will be available in TurboTax after the IRS finalizes the form and instructions and approves the TurboTax software Form 8915-F. It may not be available until sometime in March 2022.

See this TurboTax support FAQ for the Form 8915-F - https://ttlc.intuit.com/community/retirement-tax-credits-and-deductions/help/what-is-form-8915-e-qualified-2020-disaster-retirement-plan-distributions-and-repayments/00/1879654