Does anyone know if deferral of taxation for only a portion of an IRA distribution due to Covid can be done?
The taxpayer is NOT subject to any early withdrawal penalty waiver (age 65).
For instance, you are a qualified individual and withdraw $60,000 due to covid issues.
You only want to claim $40,000 as income in 2020. This consists of $30,000 of the $60,000 PLUS 1/3 ($10,000) of the $30,000 balance. The remainder of $20,000 will be taxed in 2021 and 2022 at $10,000 per year.
Or, are you forced to treat the entire $60,000 as all taxable in 2020 or $20,000 per year in 2020, 2021, and 2022?
As a side note, what if the taxpayer had taken $30,000 in January 2020, became a "qualified individual" in October and took the final $30,000 in December. Does that change anything?
My understanding from reading the rules is that ALL distributions from 1/1/20 through 12/31/20 are treated as corona related if you are a "qualified individual" regardless of the date that you became eligible.
Thanks in advance.