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Advisor Insights

Who Qualifies for Coronavirus-Related Distributions?

There are plenty of gray areas in the CARES Act's language about CRDs, says contributor Natalie Choate.

Section 2202 of the CARES Act, the giant economic stimulus/disaster relief law enacted in late March 2020, gives favorable tax treatment to certain retirement plan distributions. If a distribution qualifies as a "coronavirus-related distribution," or CRD, the recipient gets the following special breaks:

  • The income tax on the distribution can be spread over three years from 2020-22 at the taxpayer's option.
  • The distribution can be rolled over into an eligible retirement plan at any time within three years (instead of the usual 60 days), and some normal rollover restrictions won't apply. If the taxpayer already paid tax on the distribution, he can get a refund if he later uses the rollover option.
  • The 10% tax on pre-age-59 1/2 distributions does not apply.