Recontributing 100k distributions Today
I have a client who took 100k IRA Distribution this year and wanted to return it to the IRA today. My understanding that he should this allowable and the client would not owe taxes for 2020. Just wanted to confirm.
Permalink Submitted by Alan - IRA critic on Thu, 2020-12-31 20:05
If the distribution was a CRD for which client qualified, client has 3 years from the date of the CRD to repay all or part of the distribution. If the repayment is not completed today, repayment up to the due date plus extensions for filing the 2020 return will have the same result. Client would then report on Form 8915 E both the CRD and the repayment and check the box to report any taxable income on the 2020 return, although there would not be any due to the repayment.
When repaying a CRD, client needs to be sure to tell the custodian that it’s a CRD repayment, not an ordinary rollover, so the custodian will code it correctly on Form 5498. Otherwise, there will be matching issues between Form 8915 E and the 5498.
If this is not a CRD repayment, it will be subject to the usual 60 day rollover rules including the one rollover limitation. This limitation does NOT apply to CRD repayments.
Permalink Submitted by Ayman Ibrahim on Sun, 2021-01-03 22:55
Thanks Alan so much.