Form 8915-E (Qualified 2020 Disaster Retirement Plan Distributions and Repayments) and Instructions (2020); Form 8915-D (Qualified 2019 Disaster Retirement Plan Distributions and Repayments) and Instructions (2020); Form 8915-C (Qualified 2018 Disaster Retirement Plan Distributions and Repayments) and Instructions (2020); Form 8915-B (Qualified 2017 Disaster Retirement Plan Distributions and Repayments) and Instructions (2020); Form 8915-A (Qualified 2016 Disaster Retirement Plan Distributions and Repayments) and Instructions (2020); Publication 575 (Pension and Annuity Income (for use in preparing 2020 returns))
The IRS has issued new Form 8915-E, which individual taxpayers must file with their income tax returns to report coronavirus-related distributions and other qualified 2020 disaster distributions received from retirement plans in 2020, as well as 2020 repayments of those distributions. Forms 8915-A through 8915-D have been updated to allow for the reporting of distributions and repayments in 2020 attributable to earlier disasters. As background, the Form 8915 series originated in 2005 after Congress enacted hurricane relief that included increased access to retirement plan funds without the 10% early distribution penalty; optional income-spreading rules for those distributions; the opportunity to recontribute qualified disaster distributions and certain distributions obtained prior to a disaster for the purchase or construction of a principal residence; and increased limits for nontaxable loans (see our Checkpoint article). Similar statutory relief for disasters in 2016 (see our Checkpoint article) led the IRS to issue a new version of the form—Form 8915-A—and legislation for later disasters necessitated even more versions. The letter in each form’s name indicates which disasters it covers, and the year indicates the tax year during which actions reported on that form must have occurred.
New Form 8915-E is used to report qualified 2020 disaster distributions—i.e., coronavirus-related distributions authorized by the Coronavirus Aid, Relief, and Economic Security (CARES) Act (see our article)eb24501 and qualified disaster distributions under the Consolidated Appropriations Act (CAA), 2021 (see our Checkpoint article)—as well as timely repayments of those distributions. Like earlier forms, Form 8915-E is divided into four parts. Part I determines the portion of an individual’s total retirement plan distributions that may be entitled to special, disaster-related tax treatment. Part II is used to report qualified 2020 disaster distributions and determine the amount subject to tax in 2020. Similarly, Part III is used to report IRA distributions. Finally, Part IV—which does not apply to coronavirus-related distributions—determines the tax consequences of repaying a distribution taken for the purchase or construction of a main home that was not purchased or constructed due to the disaster. Taxpayers who were affected by earlier disasters and are filing the 2020 versions of Forms 8915-C or 8915-D must complete those forms before completing Form 8915-E. The 2020 versions of Forms 8915-A and 8915-B will be used only for reporting repayments of distributions because qualified disaster distributions were not permitted in 2020 for disasters in 2016 and 2017.
The 2020 version of Publication 575—an annually updated publication covering the tax treatment of distributions from various retirement arrangements, including 401(k) plans—offers an overview of coronavirus-related distributions and other disaster-related distributions, along with an explanation of taxpayers’ reporting obligations. Publication 575 explains which distributions will qualify for special tax treatment, how they will be taxed, the rules for (and consequences of) repaying qualified distributions, and when an amended return is needed. It also covers the rules for repaying qualified distributions taken to purchase or construct a main home in a disaster area and the rules for disaster-related plan loans.
EBIA Comment: Taxpayers taking advantage of the statutory relief for more than one recent disaster may find the Form 8915 series complex and bewildering despite the IRS’s best efforts to create a clear roadmap and provide helpful examples. The complexity is, perhaps, unavoidable due to the overlap of the various disaster relief statutes. Distributions for some disasters may be permitted in more than one year, and recontributions can be made for up to three years after a distribution. For example, qualified 2016 disaster distributions were permitted through December 31, 2017, and a qualified 2016 disaster distribution made in December 2017 could be repaid as late as December 2020. While the Form 8915-series reporting burden does not fall on employers or plan administrators, both may find it useful to be familiar with the forms and their operation. For more information see EBIA’s 401(k) Plans manual at Sections XII.G.2 (“Disaster-Related Distributions”), XV.H (“Special Hardship Rules for Disaster Relief”), and XVI.N (“Distributions: Participant Loans: Special Rules for Disaster Relief”).
Contributing Authors: EBIA Staff.