CRDs Are Still Available
By Sarah Brenner, JD
Director of Retirement Education
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The year 2020 has been a challenging one. With coronavirus cases rising in most of the country and economic relief stalled in Congress, many individuals may be looking to find funds to pay urgent bills. One possibility is a coronavirus-related distribution (CRD). While the first phase of the pandemic may be gone, the economic turmoil is still with us and so are CRDs. CRDs are still available through December 30, 2020. These are distributions, up to $100,000, from a company plan or IRA made anytime during 2020 (through December 30) to affected individuals.
Who is Eligible for a CRD?
While almost everybody has been affected by the virus, not everyone can take a CRD. Those individuals eligible for to take a CRD include:
- Those diagnosed with the virus.
- Those whose spouse or dependents are diagnosed.
- Those who experience adverse financial consequences as a result of either the individual, the
individual’s spouse or a member of the individual’s household*:
- Being quarantined due to the virus,
- Being furloughed or laid off, or having work hours reduced due to the virus,
Being unable to work because of lack of childcare due to the virus,
- Closing or reducing hours of a business owned or operated by the individual, the spouse or member of the household due to the virus,
- Having a reduction in pay (or self-employment income) due to the virus, or
- Having a job offer rescinded or start date for a job delayed due to the virus.
*Member of the individual’s household is someone who shares the individual’s principal residence. This can be a friend, partner, child, elderly relative or roommate.
For those eligible to take a CRD, the following relief is available:
• The 10% early distribution penalty is waived.
• The tax would be due, but could be spread evenly over three years, and the funds could be repaid over a three-year period.
Good Advice is Essential
While retirement accounts should ideally not be touched early, reality can be different, and these are challenging times. A CRD might be the only way for some to stay afloat financially. If you are considering a CRD, good advice is essential. Be sure to review your situation with a knowledgeable tax or financial advisor.
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