The Internal Revenue Service (IRS) released Notice 2020-50 to help retirement plan participants affected by COVID-19 take advantage of the CARES Act provisions.

Under the ACT, a coronavirus-related distribution of up to $100,000 between January 1 and December 30, 2020 is not subject to the 10% additional tax that otherwise generally applies to distributions made before an individual reaches age 59 ½. These distributions can be included in income in equal installments over a three-year period, and an individual has three years to repay a coronavirus-related distribution to a plan or IRA and undo the tax consequences of the distribution.

In addition, plans may suspend loan repayments that are due from March 27 through December 31, 2020, and the dollar limit on loans made between March 27 and September 22, 2020, is raised from $50,000 to $100,000.

A qualified individual is anyone who:

  • Is diagnosed, or whose spouse or dependent, is diagnosed with COVID-19
  • Has experienced adverse financial consequences as a result of the individual, the individual's spouse, or a member of the individual's household (that is, someone who shares the individual's principal residence):
    • Being quarantined, being furloughed or laid off, or having work hours reduced due to COVID-19
    • Being unable to work due to lack of childcare due to COVID-19
    • Closing or reducing hours of a business that they own or operate due to COVID-19
    • Having pay, or self-employment income, reduced due to COVID-19 or
    • Having a job offer rescinded, or start date for a job delayed, due to COVID-19

If you have any questions about your situation, please contact us.