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ComplianceTax & AccountingMarch 10, 2021

Individual Retirement Accounts: Reporting repayments of coronavirus-related distributions

A question frequently asked by custodians/trustees of individual retirement accounts (IRAs) to the Wolters Kluwer Tax-Advantaged Accounts Consulting team is how to report the “repayment” of a coronavirus-related distribution that an individual took from his/her IRA in 2020. Though the Internal Revenue Service (IRS) does not clearly address how to report the repayment of such distributions in its 2020 or 2021 Instructions for Forms 1099-R and 5498, Wolters Kluwer has the answer to that question.

When determining how to report the repayment of a coronavirus-related distribution, information from various sources must be taken into consideration. The IRS specifies that coronavirus-related distributions taken on or after January 1, 2020 and before December 31, 2020 are qualified 2020 disaster distributions. This information is clearly stated in the Instructions for IRS Form 8915-E, Qualified 2020 Disaster Retirement Plan Distributions and Repayments.

In the 2020 instructions for Form 5498, specifically for Box 14a. Repayments, it states: “Enter the amount of any repayment of a qualified reservist distribution, a qualified disaster distribution (for example, a qualified 2019 disaster distribution), or a qualified birth or adoption distribution.” And to further the point, in the 2021 reporting instructions for Form 5498, specifically for Box 14a. Repayments, it states: “Enter the amount of any repayment of a qualified reservist distribution, a qualified disaster distribution (for example, a qualified 2020 disaster distribution), or a qualified birth or adoption distribution.”

Also, in the 2020 and 2021 reporting instructions for Form 5498, specifically for Box 14b. Code, it states: “Enter… ‘DD’ for repayment of a qualified disaster distribution…”

From the different sets of instructions described above, we conclude that for 2020 and 2021 Form 5498 contribution reporting, coronavirus-related distributions repaid to an IRA are considered repayments of qualified disaster distributions with the amount reported in Box 14a. and code DD reported in Box 14b.

For an opportunity to learn more about IRAs and other tax-advantaged accounts including Health Savings Accounts and Coverdell Education Savings Accounts, consider the Wolters Kluwer IRA Library or on-demand video training offered on a variety of topics. Go here to learn more about training opportunities available to you, or you can call us at 1-800-552-9408.
Senior Specialized Consultant, Tax Advantaged Accounts
With more than 36 years of experience, Steve has worked closely with hundreds of financial organizations to help them create, implement, and maintain their tax-advantaged accounts program. Steve also has an extensive background in working with employer qualified plans.