Stash026 Posted January 28, 2021 Posted January 28, 2021 I know the IRS has said that we could use either "1" or "2" for Box 7. Just curious what the majority of people have been doing? Also, I assume we mark the entire distribution as taxable? Thanks!
Bird Posted January 28, 2021 Posted January 28, 2021 I don't know what the majority are doing but we did "1" Ed Snyder
Stash026 Posted January 28, 2021 Author Posted January 28, 2021 Just now, Bird said: I don't know what the majority are doing but we did "1" Thanks! Did you mark it as taxable also, with no withholding?
Lou S. Posted January 28, 2021 Posted January 28, 2021 If the plan adopted CARES provisions and the withdrawal was a CARES withdrawal with signed self-certification we did code 2.
Bird Posted January 29, 2021 Posted January 29, 2021 18 hours ago, Stash026 said: Did you mark it as taxable also, with no withholding? Not sure why anyone would think it is not taxable, and withholding would be whatever it was. My attitude is/was that once out the door, a CARES distribution was like any other distribution, and not our job to tell anyone it was qualified or not for tax purposes, just report it. RatherBeGolfing 1 Ed Snyder
Popular Post RatherBeGolfing Posted January 29, 2021 Popular Post Posted January 29, 2021 16 minutes ago, Bird said: Not sure why anyone would think it is not taxable, and withholding would be whatever it was. My attitude is/was that once out the door, a CARES distribution was like any other distribution, and not our job to tell anyone it was qualified or not for tax purposes, just report it. 100% this! Of course it is taxable. If there was no withholding you report no withholding. Lets go back to the ABCs of CRDs, ANY DISTRIBUTION (with a few exceptions like corrective distributions) can be a CRD. The 1099-R reports the transaction. The tax treatment of the distribution will be determined based on the taxpayer's filing of Form 8915-E. You can have a CRD from the plan with no withholding, but unless the taxpayer makes certain elections and files Form 8915-E, it is taxed like any other distribution. BTW, marking it with code 2 on the 1099-R will mean absolutely nothing unless the taxpayer also files Form 8915-E. And if they do file Form 8915-E, it doesn't matter if the 1099-R is coded as a 1 or a 2. Finally, imagine the following scenario: Taxpayer is a participant in two plans, and takes a $100,000 CRD with no withholding from each plan. Both plans have followed the rules, and will need to report the distributions accurately. Taxpayer can only treat $100,000 as CRD for preferential tax treatment, and treatment that treatment is entirely up to taxpayer. Why in the world would either plan report anything other than what happened? Bird, Luke Bailey, Bill Presson and 2 others 5
KTBS5827 Posted February 4, 2021 Posted February 4, 2021 So... If my client is provided a 1099-R as a result of making an early withdrawal from a plan other than an IRA which her company allowed under the coronavirus CARES Act that reflects a distribution code 1, am I correct in attaching Form 5329 to notify the IRS that there's an exception that applies so she won't incur the additional tax penalty? If so, do I only need to complete Part 1 & enter the tax waiver amount on line 54? Do I need to also include Form 8915-E?
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