Covid exemption for IRA w/d's

3 replies
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Greetings Community,

I'm helping clients who have a 2022 1099-R form showing a 194k w/d with a Box 7 Distribution Code of 1 - IRA box checked. The clients believe that because of Covid there was an exemption for the penalty incurred. They claim that the representative told them there wouldn't be a penalty when they called to make the withdrawal due to said exemption. However, I haven't been able to find anything for 2022 Covid related that would apply. Just in case I am missing anything, I thought I would ask the group.

Thank you!

Dawn

ProSeries Professional

This topic has been closed for replies.

qbteachmtAnswer

Level 15

"Q4. What is a coronavirus-related distribution?

A4. A coronavirus-related distribution is a distribution that is made from an eligible retirement plan to a qualified individual from January 1, 2020, to December 30, 2020, up to an aggregate limit of $100,000 from all plans and IRAs."

Look here, to see if anything applies:

https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-exceptions-to-tax-on-early-distributions

Don't yell at us; we're volunteers

T

TaxGuyBill

There were not any Covid-related exceptions for retirement withdrawals in 2022. The client and/or their retirement representative may have been thinking of the special rules during part of 2020.

Any chance they were in a Federally declared disaster area that may have qualified for the special rule for retirement withdrawals?

SensibleandHourlyAuthor

Level 6

Hello,

Thank you for responding. No, not disaster zone. I think they were just confused and now have a large amount owed to the IRS. But I would have been happy to be very wrong about that!