Cares Act $100k Covid distribution from 401(k) Plan in 2020; Payoff by 2020 Tax Deadline to an IRA vs. 401(k)
Looking for confirmation! In 2020, Participant takes a $100k CRD from 401(k) Plan. 401(k) Plan terminates in early 2021. Can Participant pay back distribution in full to an IRA vs. back to same 401(k) Plan (which no longer exists)? Both 401(k)s and IRAs are listed as eligible retirement plans but I haven’t seen many examples of one type of plan distribution with payback to another! Most IRS examples in Notice 2020-50 illustrate same plan type to same plan type. Can we mix & match eligible retirement plan types? I.e. distribute from QP and payback within 3 years to an IRA??
Permalink Submitted by Alan - IRA critic on Tue, 2021-04-13 23:02
Yes, a CRD can be repaid to any eligible retirement plan, but this CRD cannot be repaid to a Roth IRA. Participant should advise the IRA custodian that the amount of the contribution is a CRD repayment, not an ordinary rollover, and the IRA custodian should report it as such on Form 5498. The repayment can be done anytime within 3 years of the CRD and can be done partially. A repayment is first credited to the current tax year to the extent the repayment is made by the due date for that return including extensions. Both the CRD and repayments by the due date are reported on Form 8915 E.
Permalink Submitted by John Gingas on Wed, 2021-04-14 14:13
Thank you, Alan!