Multiple CVDs from Roth IRA

Submitted by Kyle Eaton on Mon, 2020-07-13 15:55

The CARES Act allows for distributions up to the amount of $100k to be classified as a COVID 19 distribution. Assuming that multiple distributions are taken from a Roth IRA account, would each distribution have its own three year rollover time frame? Say for instance a distribution taken on January 15, 2020, would need to be put back in by January 14, 2023. But a July 15, 2020 distribution in the same account would need to be put back in by July 14, 2023? It is assumed that the distributions would be less than the total contributions made over the history the account has been open, ie only contributions would be withdrawn. There should be no impact on federal income taxes.

Also, would a 2019 Roth IRA contribution in the interim have any impact on the ability to take the CVD? I am assuming the custodian would have a different code for CVD vs contribution.

Thanks.



Submitted by Alan - IRA critic on Mon, 2020-07-13 17:27

  • Yes, each individual distribution has a 3 year re payment deadline. In this case if Roth IRA regular contribution basis is distributed, there would be no current tax impact based on the time lag to complete repayment, but there would be a lost opportunity for tax free Roth earnings to be generated in the meantime.
  • Interim Roth contributions would not be affected by the CRD. The 1099R for the CRD would not have any special coding, but the repayment would be reported on Form 5498 by the custodian in Box 14a, with an assigned code in 14b to denote a CRD repayment. The taxapayer will report a CRD on Form 8915 E, for a Roth distribution would probably elect income reporting in the distribution year only, but would also have to file an 8915 for the year of each repayment.

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