Covid related distribution repay

Submitted by Ken Thompson on Wed, 2020-08-26 19:51

I drew out $13.5k from my IRA retirement fund in mid March 2020 after being furloughed. This was pre CARES Act and their were no forms to declare your withdrawal as as Covid related.

I would now like to redeposit those funds under CARES act rules but am not sure how to do it. I can’t simply make an IRA contribution through my brokerage website because I am limited to $7500.

The rule allows any Covid related disbursement between January 1, 2020 and December 31, 2020 to be repaid without penalty or taxes. No disbursements made before the CARES act was incorporated would have any paperwork officially designating it a CRD.

I also read that the law allows the CRD to be repaid even if the brokerage or bank does not consider the withdrawal CRD.

So, how do I redeposit this money?

Thank you.



Submitted by Alan - IRA critic on Wed, 2020-08-26 20:24

  • The 1099R reporting the distribution will have no special coding for CRDs. If you qualify, you will just treat the distribution as a CRD.  But any repayment of a CRD you make must be reported to the receiving plan custodian as such. That custodian will code your repayment as a CRD reayment on Form 5498 in Boxes 14a and 14b, but you and the IRS will not receive that form until May, 2021.  Again, make sure the custodian knows the deposit is a CRD repayment, so do not describe it or refer to it as a rollover when you make your repayment.
  • When you file your 2020 return, you will report the CRD on new Form 8915 E  (not yet released by the IRS) and any repayment made up to your return due date will also be shown on the 8915 E. For example, if you repay 4,500 up to your due date and elect to report the distribution over 3 years on the 8915, you will end up with 4,500 as a taxable distribution each year, with your repayment offsetting the taxable income for 2020, leaving you with the remaining 9,000 to be reported as 4,500 in 2021 and 2022.
  • I assume that you distributed cash, but if not please advise.

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