In late March 2019, Congress passed and the President signed the CARES Act – a massive economic relief package which included several measures relating to retirement plans. These measures were in addition to earlier relief provided by the IRS.
The following is a recap of the various retirement plan relief provisions:
Penalty Free Early Withdrawals: The CARES Act waives the 10% early withdrawal penalty for coronavirus-related distributions from retirement plans and provides the option of recontributing the funds for up to three years after such distributions are made.
Coronavirus-related distribution: any distribution from an eligible retirement plan (including IRAs and 401(k) plans) made: (a) on or after January 1, 2020, and before December 31, 2020, (b) to an individual who experiences any of the following with respect to the virus SARS-CoV-2 or coronavirus disease 2019 (COVID-19) –
(1) being diagnosed with such virus or disease by a test approved by the Centers for Disease Control and Prevention;
(2) having a spouse or dependent who is so diagnosed; or
(3) who, due to such virus or disease, experiences adverse financial consequences as a result of:
being quarantined, furloughed or laid off;
having work hours reduced;
being unable to work due to lack of child care;
closure or reduction of hours of a business owned or operated by the individual; or
other factors as determined by the Secretary of the Treasury.
The administrator of an eligible retirement plan may rely on the account owner’s certification that he or she satisfies these conditions in determining whether any distribution is a coronavirus-related distribution.
Any individual who receives a coronavirus-related distribution may, at any time during the three-year period beginning on the day after the date on which such distribution was received, recontribute the funds to an eligible retirement plan of which such individual is a beneficiary.
Required Minimum Distribution Rules Waived: The CARES Act waives the required minimum distribution rules for 2020 for defined contribution plans, including an eligible deferred compensation plan, and individual retirement plans.
Please contact the office of Don Fitch Accountancy at (760)567-3110 or Email Don.Fitch@CPA.com if you have any questions or would like additional information.
DON FITCH, CPA 74478 Highway 111 #3 Palm Desert, CA 92260
Toll Free: (877)CPA-Help or (877)272-4357 Cell: (760)567-3110 Fax: (760)836-0968
P.S. My firm is based upon referrals. Please feel free to refer my firm to anyone you know that is looking for a new CPA and/or tax preparer. Thank you in advance.
This blog post is intended to serve solely as an aid in continuing tax education for Don Fitch Accountancy blog, podcast, and/or email members. Due to the constantly changing nature of the subject of the materials, this product is not appropriate to serve as the sole resource for any federal tax, accounting opinion, tax return position, and must be supplemented for such purposes with other current authoritative materials. The information in this blog post has been carefully compiled from sources believed to be reliable, but its accuracy is not guaranteed. In addition, Don Fitch Accountancy is not engaged in rendering legal or other professional services and will not be held liable for any actions or suits based on this blog post, podcast, and/or email, or comments made during the above presentation. If legal advice or other expert assistance is required, seek the services of a competent professional.
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