Do they qualify for CRD? | Ed Slott and Company, LLC

Do they qualify for CRD?

We have a client who was laid off and started receiving unemployment the first Monday of April. In the last week of July, he was informed he had his position back but opted to not return due to his job being in and around Chicago and didn’t want the risk of catching Covid-19 being 61 years of age and a few minor health issues. Due to him not wanting to work in those conditions, he resigned and will just retire. He received the extra $600 in unemployment the entire time. The question is, would this allow him to take a corona related distribution and if so, how much could he take?

He can take a CRD because he qualified in April. The CRD limit is 100k and is not limited by the amount of adverse financial consequences he suffers.  While he is retiring and can take distributions he needs anyway without penalty, a CRD is broader because the income can be reported over 3 years, and any amounts he wishes to repay can also be repaid for 3 years after the CRD.  He could request the CRD, and even if the plan does not allow CRDs, he can treat the 100k distribution as a CRD and report it as such on Form 8915 E.  The rest of the plan could be directly rolled over if he wishes, and any part of the CRD he eventually wishes to repay could be repaid to the IRA, while advising the IRA custodian the amount of any CRD repayment.

 

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