The Coronavirus Aid, Relief and Economic Security (CARES) Act, signed into law authorities on March 27, outlines special rules for use of retirement funds. The CARES Act waves the 10% early distribution penalty tax on up to $100,000 of early retirement withdrawals. Moreover, it includes an option to repay any distribution within three years of the date of distribution.
Section 2103 of the Coronavirus Aid, Relief and Economic Security (CARES) Act sets new rules for use of retirement account savings to address virus-related financial hardships. For your convenience, the related section is outlined below:
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SEC. 2103. SPECIAL RULES FOR USE OF RETIREMENT FUNDS.
(a) Tax-Favored Withdrawals From Retirement Plans
(1) IN GENERAL.—Section 72(t) of the Internal Revenue Code of 1986 shall not apply to any coronavirus-related distribution.
(2) AGGREGATE DOLLAR LIMITATION.—
(A) IN GENERAL.—For purposes of this subsection, the aggregate amount of distributions received by an individual which may be treated as coronavirus-related distributions for any taxable year shall not exceed $100,000.
(B) TREATMENT OF PLAN DISTRIBUTIONS.—If a distribution to an individual would (without regard to subparagraph (A)) be a coronavirus-related distribution, a plan shall not be treated as violating any requirement of the Internal Revenue Code of 1986 merely because the plan treats such distribution as a coronavirus-related distribution, unless the aggregate amount of such distributions from all plans maintained by the employer (and any member of any controlled group which includes the employer) to such individual exceeds $100,000.
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(3) AMOUNT DISTRIBUTED MAY BE REPAID.—
(A) IN GENERAL.—Any individual who receives a coronavirus-related distribution may, at any time during the 3-year period beginning on the day after the date on which such distribution was received, make 1 or more contributions in an aggregate amount not to exceed the amount of such distribution to an eligible retirement plan of which such individual is a beneficiary and to which a rollover contribution of such distribution could
be made under section 402(c), 403(a)(4), 403(b)(8), 408(d)(3), or 457(e)(16), of the Internal Revenue Code of 1986, as the case may be.
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S.3548 — 116th Congress (2019-2020)
116th Congress (2019-2020)