If you received an IRA distribution due to a natural disaster, it may qualify as a Qualified Disaster Distribution. This article explains what a disaster distribution is, how to determine if you took a disaster distribution, and how to report it using Form 8915-F.
Step-by-Step Instructions:
- Go to the Federal Section of your tax software.
- Navigate to:
Income (Select my forms) → 1099-R, RRB, SSA → Add or Edit a 1099-R - Enter the information from your Form 1099-R (Boxes 1, 2, and 7).
- After continuing, you’ll be asked if the distribution is for a qualified disaster retirement plan distribution.
- Select Yes, then click Continue to enter the disaster-specific details.
Note: After completing the disaster distribution section, the program will automatically adjust the taxable amount from box 2a and remove the amount from the entry page. DO NOT make further changes to box 2a on your 1099-R after this point,
You must also indicate that you were affected by a natural disaster:
- Go to Basic Information → Personal Information → Additional Personal Information
- Check the box stating the taxpayer or spouse was affected by a natural disaster
- Enter the disaster designation in the box that appears
What’s a Disaster Distribution?
If you're wondering, "What's a disaster distribution?", it refers to a retirement plan distribution made to individuals affected by a federally declared disaster. These distributions may qualify for special tax treatment, such as:
- Spreading the income over three years
- Avoiding the 10% early withdrawal penalty
Examples by Year:
- 2021: Qualified distributions include:
- 2019 Puerto Rico Earthquakes (DR-4473-PR), reported on Form 8915-D
- 2020 disasters, reported on Form 8915-F (2020 disasters)
- 2022: No new qualified disaster distributions for 2020 disasters were allowed. Repayments had to be made by June 26, 2021.
Note: Coronavirus-related distributions are not considered disaster distributions for 2021 or later.
Did I Take a Disaster Distribution?
If you're asking, "Did I take a disaster distribution?" or "How do I know if I took a disaster distribution?", here’s how to check:
- Review your Form 1099-R for any disaster-related codes or notes.
- Check if you filed Form 8915-F in a prior year.
- If you received a distribution due to a federally declared disaster and were informed it qualifies for special tax treatment, it likely qualifies.
Required Forms
You may need to complete the following forms:
- Form 1099-R: Reports the distribution amount.
- Form 8915-F: Used to report and spread the disaster distribution over three years.
- Form 8606: If you have basis in a traditional IRA.
- Form 5329: May be needed to avoid the 10% early withdrawal penalty, depending on the distribution code.
To view the instructions for Form 8915-F, click here.