Rules for tax/repaying premature IRA withdrawal due to Hurricane Irma?

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MikeZ
Posts: 235
Joined: Sun Dec 07, 2014 9:17 pm

Rules for tax/repaying premature IRA withdrawal due to Hurricane Irma?

Post by MikeZ » Wed Nov 07, 2018 8:15 pm

I had to take an IRA withdrawal due to Hurricane Irma. When I read the IRS document at the time it said that:

1) The penalty is waved
2) The tax could be paid over 3 years
3) The amount could be re-contributed up to three years latter.

Now that I'm starting to get my ducks in a raw, is there any good reading on 2 and 3? I can't seem to find any technical details about the rules on how this will go.

clydewolf
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Joined: Tue Jul 21, 2015 12:51 pm

Re: Rules for tax/repaying premature IRA withdrawal due to Hurricane Irma?

Post by clydewolf » Thu Nov 08, 2018 2:08 pm

Did you read chapter 3 of pub 590-b? https://www.irs.gov/pub/irs-pdf/p590b.pdf

Topic Author
MikeZ
Posts: 235
Joined: Sun Dec 07, 2014 9:17 pm

Re: Rules for tax/repaying premature IRA withdrawal due to Hurricane Irma?

Post by MikeZ » Tue Dec 18, 2018 9:02 pm

So here is what I don't understand:
https://www.congress.gov/bill/115th-con ... -bill/3823

(Sec. 502) This section waives the 10% additional tax on early distributions from retirement plans for up to $100,000 in distributions made on or after August 23, 2017, and before January 1, 2019.

The distributions must be made to an individual: (1) whose principal place of abode on specified dates was in a hurricane disaster area, and (2) who has sustained an economic loss by reason of Hurricanes Harvey, Irma, or Maria.

A taxpayer who has received such a distribution may: (1) repay the distribution by making additional contributions to a retirement account within three years, and (2) include the distribution in gross income by dividing the amount over a three-year period.
But then when I read 590b, it seems the only way to not repay less than 1/3 of the contribute within one year is to declare it as income and then after I make a later repayment amend my previous return.

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