Q. I had to borrow from my IRA but paid back what I borrowed in November 2020. My federal tax return isn’t taxing the distribution, as promised. But does New Jersey this part of the March 2020 CARES Act?
— Stumped
A. Yours is a great question, and one many people who took money from retirement accounts because of the coronavirus pandemic are asking.
Some background first.
A coronavirus related distribution (CRD) — the withdrawal you’re talking about — is a distribution that is made from an eligible retirement plan to a qualified individual in the 2020 calendar year up to a total of $100,000, said Patricia Daquila, a certified financial planner and certified public accountant with Peapack Private Wealth Management in New Providence.
She said to be eligible, you, your spouse or your dependent needed to have been diagnosed with COVID-19 or experienced financial hardship because of the virus.
You can either repay the distribution within a three-year period from when you took the distribution or you can choose to include the income over a three-year period, she said.
You can also include the entire distribution in income in the year of the distribution, she said.
But if you decide to repay the distribution within the three-year period, as you say you did, then the distribution will be treated as though it was repaid in a direct trustee-to trustee transfer so that you do not owe tax on the distribution, Daquila said.
“The New Jersey website clearly states that New Jersey follows the federal guidelines and timelines for coronavirus distributions, she said. “If your CRD is qualified as a tax-free rollover for federal purposes, then New Jersey would recognize it as well.”
If your repayment of the CRD in 2020 qualifies as a tax-free rollover for federal tax purposes, then New Jersey will recognize it as a tax-free rollover, Daquila said, noting you should report your distribution in the same way that you report your federal distribution.
Email your questions to Ask@NJMoneyHelp.com.
Karin Price Mueller writes the Bamboozled column for NJ Advance Media and is the founder of NJMoneyHelp.com. Follow NJMoneyHelp on Twitter @NJMoneyHelp. Find NJMoneyHelp on Facebook. Sign up for NJMoneyHelp.com’s weekly e-newsletter.
"how" - Google News
April 30, 2021 at 04:31PM
https://ift.tt/2RgJRuA
How does N.J. treat a coronavirus retirement distribution? - NJ.com
"how" - Google News
https://ift.tt/2MfXd3I
Bagikan Berita Ini
0 Response to "How does N.J. treat a coronavirus retirement distribution? - NJ.com"
Post a Comment