Under the CARES act there is a coronavirus-related distribution, which allows you to take up to $100,000 from eligible retirement plans without penalty under certain qualifying circumstances:
– either you, a spouse, or a dependent is diagnosed with COVID-19.
– you experience adverse financial consequences because, for COVID-19-related reasons,
– you have been quarantined, furloughed, or laid off,
– you had your work hours reduced,
– you had to close or reduce the hours of your business OR
– you have been unable to work due to lack of child care.
A taxpayer who receives such a distribution can repay all or part of it within the three-year period beginning on the day after the distribution was received and have it treated as a tax-exempt rollover.
If the distribution is not repaid, it will be taxed as income over three years, 2020, 2021, and 2022, with one-third of the income reportable in each of these tax years.
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