April 2020 Newsletter question

Submitted by Vickie Intriago on Sun, 2020-04-12 20:33

First page of newsletter mentions funds could be repaid. What is this referring to?

The tax would be due but could be spread evenly over 3 years, and the funds could be repaid during those 3 years.

Permalink Submitted by Alan - IRA critic on Sun, 2020-04-12 20:52

These are “corona virus related” distributions (CVDs) created by the CARES Act. However, the retirement plan owner must qualify for this, and currently that requires being directly impacted by the virus (infected, job loss, hours reduced, quarantined, loss of child care etc). All the more indirect causes still need to be defined by the IRS.
Once a person qualifies, all distributions taken in 2020 through 12/30/2020 qualify. Taxes are due, but the income can be reported over 3 years (2020-2022), there is no penalty, and the distributions can be rolled back for up to 3 years from the date of distribution. If rolled back, earlier returns reporting the income must be amended to claim a refund. CVDs are limited to 100,000 per taxpayer.