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May 5, 2020

What is a Coronavirus-related distribution?

Your Guide


Coronavirus related distribution

A 2020 distribution for which special tax benefits apply due to COVID-19

A coronavirus-related distribution (CRD) is one that is permitted to be taken by qualified individuals from January 1, 2020 and before December 31, 2020.

The Coronavirus Aid, Relief, and Economic Security (CARES)Act   permits eligible individuals to take coronavirus-related distributions from their retirement savings accounts.

You may take coronavirus-related distributions of up to an aggregate amount of $100,000 at any time after January 1, 2020 and before December 31, 2020, from eligible retirement savings accounts.

Cite: SEC. 2202. Special rules for use of retirement funds., of the CARES Act

For this purpose, the following is a list of the eligible retirement savings plans from which you can take coronavirus-related distributions:

  • Traditional IRAs,
  • Roth IRAs,
  • Qualified retirement plans, such as a 401(k), profit sharing or pension plan,
  • 403(a) annuity plans,
  • Eligible Governmental 457(b) deferred compensation plans, and
  • 403(b) plans.

The great news about coronavirus-related distributions

A CRD qualifies for the following benefits:

  • It is not subject to the 10% early distribution penalty
  • The income from the CRD is spread ratably over three years (2020,2021 and 2022), unless the taxpayer elects to include the amount in income for 2020.
  • Any portion of the amount may be rolled over within 3 years of receipt.

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