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Level 3
February 5, 2021
Question

How do you reflect an IRA distribution in 2020 that was returned within the prescribed time period

  • February 5, 2021
  • 3 replies
  • 21 views
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3 replies

sjrcpa
Level 15
February 5, 2021

Indirect rollover, unless you are referring to returning a COVID related distribution to which my answer is I don't know.

The more I know the more I don’t know.
qbteachmt
Level 15
February 5, 2021

Was the money returned "as if it never happened" (rollover) or do you mean within the 3 years?

Q7. May I repay a coronavirus-related distribution?

A7. In general, yes, you may repay all or part of the amount of a coronavirus-related distribution to an eligible retirement plan, provided that you complete the repayment within three years after the date that the distribution was received. If you repay a coronavirus-related distribution, the distribution will be treated as though it were repaid in a direct trustee-to-trustee transfer so that you do not owe federal income tax on the distribution.

If, for example, you receive a coronavirus-related distribution in 2020, you choose to include the distribution amount in income over a 3-year period (2020, 2021, and 2022), and you choose to repay the full amount to an eligible retirement plan in 2022, you may file amended federal income tax returns for 2020 and 2021 to claim a refund of the tax attributable to the amount of the distribution that you included in income for those years, and you will not be required to include any amount in income in 2022. See sections 4.D, 4.E, and 4.F of Notice 2005-92 for additional examples.

From: https://www.irs.gov/newsroom/coronavirus-related-relief-for-retirement-plans-and-iras-questions-and-answers

https://www.irs.gov/pub/irs-dft/i8915e--dft.pdf

 

 

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safcpaAuthor
Level 3
February 5, 2021

It was the RMD returned before August and it looks like you record it as a rollover with a G as distribution type regardless of what the 1099-R has which in myu case was a 7 for normal distrribution.

Thanks for the replies

qbteachmt
Level 15
February 9, 2021

"as a rollover with a G as distribution type"

You stated they got it, then redeposited it. The G is for Direct Transfer, not Rollover by the account owner. You have a 7, then indicate it was a rollover, as usual with any rollover. Because they did it by the August date, it is a qualified rollover.

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safcpaAuthor
Level 3
February 9, 2021

Thank you. I have not had an indirect rollover before