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taxmap/pubs/p590-025.htm#TXMP549daa20 (p73)

taxmap/pubs/p590-025.htm#TXMP546e0a20 Repayment of Qualified Hurricane Distributions(p73)

Repayment of Qualified Hurricane Distributions

Most qualified hurricane distributions are eligible for repayment to an eligible retirement plan. Payments received as a beneficiary (other than a surviving spouse), periodic payments (other than from IRAs), and required minimum distributions are not eligible for repayment. Periodic payments, for this purpose, are payments that are for (a) a period of 10 years or more, (b) your life or life expectancy, or (c) the joint lives or joint life expectancies of you and your beneficiary. For distributions eligible for repayment, you have 3 years from the day after the date you received the distribution to repay all or part to any plan, annuity, or IRA to which a rollover can be made. Within the time allowed, you may make as many repayments as you choose. The total amount repaid cannot be more than the amount of your qualified hurricane distributions. Amounts repaid are treated as a qualified rollover and are not included in income. The way you report repayments depends on whether you reported the distributions under the 3-year method, or you elected to report the distributions in the year of distribution.

taxmap/pubs/p590-025.htm#TXMP04803b5a Repayment of distributions if reporting under the 1-year election.(p74)

If you elected to include all of your qualified hurricane distributions received in a year in income for that year and then repay any portion of the distributions during the allowable 3-year period, the amount repaid will reduce the amount included in income for the year of distribution. If the repayment is made after the due date (including extensions) for your return for the year of distribution, you will need to file a revised Form 8915 with an amended return. See Amending Your Return, later.

taxmap/pubs/p590-025.htm#TXMP18eb143b Repayment of distributions if reporting under the 3-year method.(p74)

If you are reporting the distribution in income over the 3-year period and you repay any portion of the distribution to an eligible retirement plan before filing your 2007 tax return by the due date (including extensions) for that return, the repayment will reduce the portion of the distribution that was included in income in 2007. If you repay a portion after the due date (including extensions) for filing your 2007 return, the repayment will reduce the portion of your distribution that is includible on your 2008 return. If, during a year in the 3-year period, you repay more than is otherwise includible in income for that year, the excess may be carried forward or (after 2005) back to reduce the amount included in income for that year.

taxmap/pubs/p590-025.htm#TXMP2daa310d
Example.(p74)

John received a $90,000 qualified hurricane distribution from his pension plan on November 15, 2006. He does not elect to include the entire distribution in his 2006 income. Without any repayments, he would include $30,000 of the distribution in income on each of his 2006, 2007, and 2008 returns. On November 10, 2007, John repays $45,000 to an IRA. He makes no other repayments during the allowable 3-year period. John may report the distribution and repayment in either of the following ways.

• Report $0 in income on his 2007 return, and carry the $15,000 excess repayment ($45,000 – $30,000) forward to 2008 and reduce the amount reported in that year to $15,000, or
• Report $0 in income on his 2007 return, report $30,000 on his 2008 return, and file an amended return for 2006 to reduce the amount previously included in income to $15,000 ($30,000 – $15,000).

taxmap/pubs/p590-025.htm#TXMP6e8b7d57 Repayment of qualified hurricane distribution to a Roth IRA.(p74)

If you make a repayment of a qualified hurricane distribution to a Roth IRA, the repayment is first considered to be a repayment of earnings. Any repayment of a qualified hurricane distribution in excess of earnings will increase your basis in the Roth IRA by the amount of the repayment in excess of earnings.

taxmap/pubs/p590-025.htm#TXMP0e530791 Example.(p74)

In 2005, Ned takes a $30,000 qualified hurricane distribution from a Roth IRA. The $30,000 is the total value of the Roth IRA. He has $20,000 in basis (contributions) and $10,000 represents earnings. He elects to include the entire distribution in income for 2005. In 2005, he reports the distribution on Form 8606 and Form 8915 and determines that the taxable portion of the distribution is $10,000 ($30,000 – $20,000).

In 2007, Ned makes a $15,000 repayment of the 2005 qualified hurricane distribution to his Roth IRA. He will file an amended return for 2005 for the $10,000 taxable portion of the distribution that was included in income. $5,000 of the $15,000 repayment will represent basis in his Roth IRA for future distributions. $10,000 will be included in income when distributed in the future.

taxmap/pubs/p590-025.htm#TXMP27f22a03 Amending Your Return(p74)

Amended/Corrected Tax Return

If, after filing your original return, you make a repayment, the repayment may reduce the amount of your qualified hurricane distributions that were previously included in income. Depending on when a repayment is made, you may need to file an amended tax return to refigure your taxable income.

If you make a repayment by the due date of your original return (including extensions), include the repayment on your amended return.

If you make a repayment after the due date of your original return (including extensions), include it on your amended return only if either of the following apply.

• You elected to include all of your qualified hurricane distributions in income in the year of the distributions (not over 3 years) on your original return.
• The amount of the repayment exceeds the portion of the qualified hurricane distributions that are includible in income for 2007 and you choose to carry the excess back to your 2005 or 2006 tax return.

taxmap/pubs/p590-025.htm#TXMP742aa0b3
Example.(p74)

You received a qualified hurricane distribution in the amount of $90,000 on October 15, 2006. You choose to spread the $90,000 over 3 years ($30,000 in income for 2006, 2007, and 2008). On November 19, 2007, you make a repayment of $45,000. For 2007, none of the qualified hurricane distribution is includible in income. The excess repayment of $15,000 can be carried back to 2006. Also, rather than carry the excess repayment back to 2006, you can carry it forward to 2008.

File Form 1040X, Amended U.S. Individual Income Tax Return, to amend a return you have already filed. Generally, Form 1040X must be filed within 3 years after the date the original return was filed, or within 2 years after the date the tax was paid, whichever is later.

Previous Page:  Publication 590 - Individual Retirement Arrangements (IRAs) - Hurricane-Related Relief Next Page:  Publication 590 - Individual Retirement Arrangements (IRAs) - Retirement Savings Contributions Credit (Saver's Credit) Use   to find additional occurrences of topic items.