New law provides relief for eligible taxpayers who need funds from IRAs and other retirement plans
Are you any one of the following:
1. You are diagnosed with COVID-19 or SARS-CoV-2
2. Your spouse or dependent is diagnosed with COVID-19 or SARS-CoV-2
3. You experience adverse financial consequences as a result of being quarantined, furloughed or laid off
4. You experience adverse financial consequences as a result of being unable to work due to lack of child care
5. You experience adverse financial consequences as a result of closing or reducing hours of a business that you own due to COVID-19 or SARS-CoV-2
You are eligible for a distribution of up to $100,000 from an eligible retirement account, under section 2205 of the CARES Act. This is available until December 31, 2020. However, employers may place limitations on withdrawals from their 401(k) and 403(b) plans.
Eligible retirement accounts are:
- 401(k),
- 403(b),
- Profit sharing plans and
- IRAs
CARES Act Relief
- The 10% additional tax on early distributions (before the age of 59 1/2) does not apply to individuals mentioned above.
- The distributions may be included in income over a three year period. (optional). They are reported on form 8915-E
- The distribution may be repaid back within the three year period without any income tax on the same.
- If a loan is outstanding on the retirement account on or after March 27, 2020 to December 31, 2020, any repayments due can be delayed for a year. Interest is accrued during this period.
