Individuals who have been affected by COVID-19 are able to take distributions of up to $100,000 from certain retirement accounts (401(a), 401(k), 403(a), 403(b), 457(b) plans and IRAs) during calendar year 2020. Eligible individuals include:
- individuals diagnosed with COVID-19; or
- individuals whose spouse or dependants have been diagnosed with COVID-19; or
- individuals that have experienced financial consequences as a result of being quarantined, laid off, furloughed, having work hours reduced, or not being able to work due to unavailable child care.
Distributions are not subject to withholding or the 10% early distribution penalty. Income tax on the distribution can be spread over a three-year period or individuals can repay the contributions over a three-year period.
In addition, the required minimum distribution rules will be waived for individuals who would ordinarily be required to receive such distributions during 2020 (generally individuals who turn 72 after 1 January 2020). This applies in respect of the same aforementioned retirement accounts.