Tired to search. What code are you using for Covid-19 distributions

[Pacun]

As you know 401k admins are issuing 1099R with code 1 if under 59.5 years old.  The Taxpayer self certifies that the distribution was because he was affected by covid 19. 

What code are you using so that the penalty is not added?

[Lee B]

See IRS Notice 2020-50

[Pacun]

Answer to question: Use code 2.

[Lee B]

Actually this trail of breadcrumbs leads to Form 8915E

[Possi]

In Taxwise, my 1099R has a worksheet, line 5 that, when checked leads to the 8915E.

 

[schirallicpa]

The 8915E is not scheduled to be available until March 2

 

[RitaB]

Do we have to use 8915 if the client wants to report the entire distribution in 2020?  Can we use Code 12 on Form 5329 Line 2 to show the distribution is not subject to the early withdrawal penalty and be done?  ATX is allowing me to do that.  Can I trust ATX?  Forgive me for not reading Instructions to Form 8915 yet.

 

[RitaB]

13 minutes ago, RitaB said:

Do we have to use 8915 if the client wants to report the entire distribution in 2020?  Can we use Code 12 on Form 5329 Line 2 to show the distribution is not subject to the early withdrawal penalty and be done?  ATX is allowing me to do that.  Can I trust ATX?  Forgive me for not reading Instructions to Form 8915 yet.

 

Never mind.  It is staring me right in the face on Form 5329.  I guess I cannot entirely rely upon Code 12 on Form 5329.  My bad.  Carry on.

[schirallicpa]

Thank you for responding to yourself.  I was going to check that out in a few minutes.  

 

[RitaB]

1 minute ago, schirallicpa said:

Thank you for responding to yourself.  I was going to check that out in a few minutes.  

 

Feel free cause I have trust issues.

 

[Pacun]

Rita, 

I am on the same situations:  After giving my clients the three options at hand, and giving them the dollar figures for each choice, I have three clients that have decided to pay all taxes in 2020 but I guess I will not able to send their taxes this week.

This are the three choices:
Report the whole distribution in 2020 and be done.
Report 1/3 of the distribution and report 1/3 in 2021, and the other 1/3 in 2022 tax year.
Elect to report 1/3 and send 1/3 of the money back to the 401k plan before timely filing 2020 including extensions and report nothing in 2020.

MUST we wait for form 8915F to avoid that early withdraw penalty?

[RitaB]

35 minutes ago, Pacun said:

Rita, 

I am on the same situations:  After giving my clients the three options at hand, and giving them the dollar figures for each choice, I have three clients that have decided to pay all taxes in 2020 but I guess I will not able to send their taxes this week...MUST we wait for form 8915F to avoid that early withdraw penalty?

Well, I don't know, but I sent my three who don't want to spread it over three years this morning before seeing the directions on 5329.  They were all accepted.  I don't know whether to amend for that Form 8915E or hope nothing happens.  I would rather chew off my right arm than for a client to get a letter where I messed up. 

Or where my software messed up, like Line 10b not making it to the SS benefits worksheet.  (See thread:  Taxable SS and 300 donation).  That's on me when it gets adjusted, but I think I caught them all.