Covid distribution of $100k from SEP IRA to new safe harbor 401k
Client took $100k from his SEP IRA as a COVID related distribution. Is now in a position to pay it back under the COVID rules that allow for repayment within 3 years. Can he repay to the new safe harbor 401k he established for his company (rollovers are allowed)?
Permalink Submitted by Alan - IRA critic on Tue, 2021-08-24 00:01
This CRD had to have been taken in 2020. If he filed an extension for his 2020 return (till 10/15), he has until 10/15 to repay the CRD and will then have no taxable income from the CRD in 2020. He would then opt to report the entire CRD for 2020 since it will not be taxable with the repayment. Either way, he still must file Form 8915 E with his 2020 return to report the CRD and any repayment he makes if he extended his return. As for repaying to the 401k, that can be done if the 401k accepts CRD repayments. If not, then he would have to repay to an IRA.