covid-19 relief 401a Distribution

 The Coronavirus Aid, Relief and Economic Security (CARES) Act, signed into law on March 27, 2020 creates a new penalty-free distribution available to a “qualified individual” who meets any one of the following:  

•  Has been diagnosed with the coronavirus, COVID-19 by a medical provider using a diagnostic test approved by the Centers for Disease Control and Prevention.  
• Spouse or dependent has been diagnosed with coronavirus, COVID-19, by a medical provider using a diagnostic test approved by the Centers for Disease Control and Prevention.  
• Has experienced an adverse financial impact due to quarantine, furlough, layoff, reduced work hours or inability to work due to issues with childcare related to coronavirus, COVID-19.  
• Has faced other coronavirus, COVID-19-related factors as determined by the Secretary of the Treasury.  

 The coronavirus COVID-19 distribution by “qualified individuals” must be taken by December 31, 2020, and may not exceed $100,000 for all coronavirus, COVID-19 withdrawals. 

 If you are a ”qualified individual” and take a COVID-19 distribution, the Act provides that you will be able to pay income tax on the distribution over a three-year time span. You may also repay these distributions within three years, and for any portion repaid, the tax consequences of the initial distribution will be abated by the IRS. These repayments will not be subject to plan contribution limits.