Permissible to do a CARES Act withdrawal and Roth IRA contribution the same year?

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CrisisAverted
Posts: 313
Joined: Tue Oct 20, 2020 5:57 am

Permissible to do a CARES Act withdrawal and Roth IRA contribution the same year?

Post by CrisisAverted »

If someone has made a CARES Act distribution from a Roth 401k and repaid that into a Roth IRA, can they also contribute to the Roth IRA the same taxable year? Or does the repayment into the Roth IRA essentially count as the contribution for that year?

What if the repayment was made the following calendar year (but still same taxable year before taxes are filed)?
wesley888
Posts: 2
Joined: Mon Jan 20, 2020 6:38 pm

Re: Permissible to do a CARES Act withdrawal and Roth IRA contribution the same year?

Post by wesley888 »

According to my accountant, I can repaid the money I took out from my Roth IRA in the next 3 years like nothing have happened. It has nothing to do with the IRA contribution amount.
Alan S.
Posts: 12669
Joined: Mon May 16, 2011 6:07 pm
Location: Prescott, AZ

Re: Permissible to do a CARES Act withdrawal and Roth IRA contribution the same year?

Post by Alan S. »

CrisisAverted wrote: Sat Apr 10, 2021 11:57 pm If someone has made a CARES Act distribution from a Roth 401k and repaid that into a Roth IRA, can they also contribute to the Roth IRA the same taxable year? Or does the repayment into the Roth IRA essentially count as the contribution for that year?

What if the repayment was made the following calendar year (but still same taxable year before taxes are filed)?
Repayment does not affect your regular Roth contributions. But when you make the repayment you should clearly explain to your Roth IRA custodian that you are repaying a CRD. They will then report that to the IRS on Form 5498. You also have to file an 8915 E with your 2020 tax return showing the amount of the CRD and the amount repaid by the due date.
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