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10% penalty on early distributions from retirement plan in 2020

Rick Whelan
Level 1

Proseries is still computing the 10% penalty on early distributions from retirement plans. What am I not doing to tell it not to?

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4 Replies 4
jofijohnjoseph
Level 4

The 10% penalty is only waived for qualified individuals as defined under the CARES Act.  The criteria is largely all encompassing, but it is not a get out of jail card for everyone.

If your client meets those conditions, you will need to go down the 1099-R form and click the box for Coronavirus distribution.  At that point, you will receive an error message, because Form 8915-E has not been finalized.

See here:

How to enter coronavirus-related retirement plan d... - Intuit Accountants Community

qbteachmt
Level 15

Are you also referencing the 5329?

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athaureaux6
Level 7

Hi the 10% penalty can be waived very easily with Proseries. They updated that a long time ago. Just go to Form 5329 scroll down a little bit, look for letter L, enter the amount of the distribution and you will see that the program will place code 12 on Line 2. Code 12 means a Coronavirus related distribution and the program will waive the 10 percent penalty. Make sure you look for heading "Distributions not subject to additional tax " or something like that. You will notice when you input the amount of the distribution, PS will put 12 on Line 2, and waives the penalty. I have done many times. Thank you 

 

leavemealone
Level 1

Thanks so much.  Ive been struggling with how to avoid this penalty for two days.

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