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Form 8915-E is used by taxpayers who were adversely affected by the coronavirus in 2020 and who
received a retirement plan distribution that qualifies for favorable tax treatment. The distribution, whether an actual distribution or a plan loan offset, can be made from a variety of retirement plans:
- An IRA: traditional, SEP, SIMPLE, or Roth.
- A qualified pension, profit-sharing, or stock bonus plan (including a 401(k) plan).
- A qualified annuity plan.
- A tax-sheltered annuity contract.
- A governmental section 457 deferred compensation plan.
Separate forms are completed for married filers who both received qualified distributions. The entire qualified distribution can be included in income in 2020, or it can be spread out equally over three years. Exception: the entire distribution must be reported on the 2020 tax return if the taxpayer (or spouse, if applicable) dies in 2020.
Note: If you are including Form 8915-E in the return, the taxable amount of the distribution in the Form 1099-R entry window should be zero. The taxable amount will then flow to the return from Form 8915-E.
There are several caveats:
- The distribution must have been made before December 31, 2020.
- The distribution must have been made to a "qualified individual", defined as someone who meets any of the following criteria:
- The taxpayer who was diagnosed with coronavirus, or
- The taxpayer with a spouse or dependent who was diagnosed with coronavirus, or
- The taxpayer, spouse, or anyone who shares the taxpayer's principal residence experienced adverse financial consequences as a result of any of the following:
- quarantine, furlough, layoff, or reduced work hours due to coronavirus;
- inability to work due to lack of childcare due to coronavirus;
- closing or reducing the hours of a business they own or operate due to coronavirus;
- reduced pay or self-employment income due to coronavirus;
- job offer rescinded or start date delayed due to coronavirus.
- The total of all qualified distributions from all retirement plans is $100,000. The excess over $100,000 may be subject to the additional tax on early distributions. If separate forms are being completed for a taxpayer and spouse, the $100,000 limit applies to each separately.
- A distribution treated as a 2020 disaster distribution isn't eligible for either the 20% Capital Gain Election or the 10-Year Tax Option on Form 4972.
- Qualified distributions can be repaid. The repayments are treated as trustee-to-trustee transfers, and repayments before the tax return is filed can be included on Form 8915-E. Certain distributions cannot be repaid, however:
- Qualified 2020 disaster distribution received as a beneficiary (other than a surviving spouse).
- Required minimum distribution.
- Non-IRA distribution that is part of a series of substantially equal periodic payments made for
- a period of ten years or more, or
- the taxpayer's life expectancy, or
- the joint lives or joint life expectancies of the taxpayer and their beneficiary.
If a taxpayer received distributions in 2020 for 2018 and/or 2019 disasters and is filing Forms 8915-C and/or 8915-D, respectively, those forms need to be completed before completing Form 8915-E. See the Form 8915-E instructions for guidance on coordinating the forms and distributions.