COVID Hardship Distribution Relief: Three-Year Delayed Taxation, Repayments, Plan Loans, and Form 8915-E

Description

Section 2022 of the CARES Act provides relief for amounts withdrawn from IRAs and other qualified plans due to the current pandemic. This section allows a qualified individual to spread the taxation of amounts up to $100,000 and withdrawn between Jan. 1 to Dec. 30, 2020, over a three-year period. Recipients are allowed to repay amounts withdrawn and avoid taxation if reported and restored timely.

The IRS anticipates issuing guidance on this relief but suggests, in the meantime, taxpayers follow guidance issued under Notice 2005-92 for Katrina Emergency Tax Relief Act of 2005. Section 2022 provides additional relief by delaying repayment of plan loans and increasing the limits on plan loans. For taxpayers who are no longer receiving benefits from their employer or unemployment, the ability to defer taxation of these distributions is critical.

Tax professionals working with individuals who participate in qualified retirement plans need to understand this relief's nuances, including how to report the distribution and qualifications on Form 8915-E. Our experienced panelist will explain the latest guidance on COVID relief for hardship withdrawals, including which taxpayers are eligible for relief, how to handle deferral of taxation of these distributions, amending returns for repayments of amounts withdrawn, and properly reporting transactions on Form 8915-E.

Listen as our authoritative presenter, a retirement tax law specialist, explains the latest guidance on Section 2022 COVID relief for qualified retirement plans, including IRAs, for tax professionals working with businesses and individuals. He will cover delaying taxation of certain distributions, repaying these same distributions, repayment terms relaxation for plan loans, and avoiding the premature distribution penalty.