Can surviving spouse pay back Coronavirus related IRA distribution?

Submitted by Cassandra Lenfert on Wed, 2022-09-21 16:33

I’m working with a client whose husband died in 2021. In 2020, the client’s husband had taken a Coronavirus related distribution from his IRA. The husband died in April 2021 before the 2020 or 2021 tax returns were filed (working to complete the late 2020 return now as well as the extended 2021 return). I am trying to determine if client is allowed to pay back this Coronavirus related distribution now to eliminate the 3 year spread income recognition, even though her husband’s IRA where the distribution was originally taken from has been rolled over to her. Any thoughts?



Submitted by Alan - IRA critic on Thu, 2022-09-22 03:22

  • Was unable to locate any IRS guidance allowing the surviving spouse to repay CRD distributions. CRDs were modeled on IRS Notice 2005-92  (Hurricane Katrina disaster distributions). In that Notice it states the following: “If a qualified individual dies before the full taxable amount of the Katrina distribution has been included in gross income, then the remainder must be included in gross income for the taxable year that includes the individual’s death.”
  • So how does that square with the fact that the 2020 return is yet to be filed?  I think that your choice is to either report 1/3 for 2020 and 2/3 for 2021 year of death, or to opt out of the 3 year spread and report the entire distribution on the 2020 return. Either way, the tax due would all be incurred in a joint filing year and none in 2022 when surviving spouse would be filing single at the higher rates.

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