Part of an email from a CPA earlier today:
Taxpayers under 59 ½ who would normally be subject to a 10% early retirement penalty for withdrawals form their retirement accounts are also provided some relief. The early withdrawal penalty will not apply to a Coronavirus related distribution not to exceed $100,000.00 made during 2020. To be eligible, the distribution must be made after January 1, 2020 and before December 31, 2020 to an individual.
1) Who is diagnosed with the virus SARS-CoV2 or with COVID-19 by a test approved by the CDC.
2) Whose spouse or dependent is diagnosed with such virus by such test.
3) Who experienced adverse financial consequences as a result of being quarantined, being furloughed, laid off, or having work hours reduced due to such virus.
4) Unable to work due to lack of childcare due to the virus or closing or reducing hours of a business due to the virus.
The taxpayer may at any time during a 3-year period beginning on the day after the distribution make one or more contributions not to exceed the distribution to an eligible retirement plan of which the taxpayer is a beneficiary. Alternatively, the taxpayer may elect to have the distribution included in income ratably over the 3-year period beginning in 2020.
For taxpayers in 401 K plans, the act doubled the amount of loans a taxpayer who has been diagnosed with the virus or affected by economic loss can take in loans in the next 6 months from their account. They may be able to borrow the lower of $100,000.00 or 100% of the account balance. Taxpayers with either new or existing 401 K loans can delay repayment due in 2020 for a year.
