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covid early withdrawal of 401k


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14 hours ago, Marie said:

Client withdrew out of 401k, reported all monies in one year.  Made income high, but now wants to apply for student loans.  Can that be amended to pay over 3 years? 

No, it cannot be changed once the return has been filed.

The only option now is to recontribute the distribution (in whole or in part) if the funds have not been spent.

The amount recontributed will be treated as a tax free rollover, then the 2020 return can be amended to exclude that amount from taxable income.

You can find details in notice 2020-50 and sec 2202 of the cares act.


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