By: Todd Schanel, CFA, CPA, CFP® and Jackie Goldstick, CFP®
on April 16, 2020

CARES Act-Retirement Provisions-CPA-JupiterFLThere are several provisions in the CARES Act, which was signed into law on March 27, 2020, that provide flexibility to retirement account owners. In a previous blog post, we discuss the suspension of Minimum Distribution Requirements for 2020.  But perhaps the most significant change to IRAs under the CARES Act was the establishment of Coronavirus-Related Distributions.

Coronavirus-Related Distributions

Coronavirus-Related Distributions are distributions from IRAs and/or employer-sponsored retirement plans of up to $100,000 subject to the following criteria:

  • You, your spouse or a dependent are diagnosed with COVID-19;
  • You have reduced income because of quarantine, layoff, furlough or reduced work hours;
  • You are unable to work due to the loss of child-care or school closure; or
  • Your business or workplace was required to close due to COVID-19

(It appears that Congressional intent was to make Coronavirus-Related Distributions broadly available and the IRS is also expected to take a generous view of what qualifies to be a Coronavirus-Related Distribution.  However, specific guidance is still forthcoming.)

The primary benefits of Coronavirus-Related Distributions are as follows:

  • No 10% early withdrawal penalty: Under normal circumstances, withdrawals from retirement accounts prior to age 59 ½ are subject to a 10% penalty. A Coronavirus-Related Distribution will NOT be subject to the early withdrawal penalty.
  • No Mandatory Withholding Requirements: Usually, distributions from employer retirement plans are subject to a mandatory 20% withholding. That requirement is waived for Coronavirus-Related Distributions.
  • Income can be spread over 3 years: While these distributions are subject to income tax, a Coronavirus-Related Distribution provides the option to spread the associated tax liability over the tax years 2020, 2021 and 2022. The decision to spread out the tax will depend on your personal income situation. For example, if 2020 is a low-income year, you may be better off paying the tax in 2020.
  • Distributions can be repaid over 3 years. Coronavirus-Related Distributions can be repaid for up to 3 years and any repaid amounts will not be subject to tax.

Other Retirement Provisions Under CARES

In addition to Coronavirus-Related Distributions and suspension of RMDs, CARES included the following provisions.

  • Company Retirement Plan Loans: If your employer retirement plan permits loans, you can now borrow up to $100,000 or 100% of the vested balance from 401(k), 403(b), 457(b), or profit-sharing accounts between March 27, 2020, and December 31, 2020.  The normal limit is $50,000 or 50% of the vested balance.  If you have an existing loan outstanding under a retirement plan, any payments due between March 27, 2020, and the end of 2020 are suspended until 2021.
  • 2019 IRA Contributions: To coincide with the extension to file 2019 tax returns, contributions to IRAs and ROTH IRAs for 2019 can now be made up until July 15, 2020.

If you have any questions, please feel free to contact our offices.


Schanel & Associates is a CPA firm specializing in accounting, tax, business valuation and litigation support serving Palm Beach, Martin and St. Lucie Counties and beyond since 1993. Our CPAs and accounting professionals work with individuals, businesses, estates and trusts to provide everything you need under one roof. For more information, contact us today at 561-624-2118.
Todd Schanel has been a principal at Schanel & Associates since 2004, where he specializes in financial planning, tax planning and consulting services. He also serves as Founding Principal and Director of Investment Advisory Services at Core Wealth Management, our sister company, where he leads an accomplished professional team offering independent and objective financial advice to help clients achieve their financial goals. Todd has been a CFA Charterholder since 2005, and in 2007 he earned his Certified Financial Planner® designation and became a licensed CPA. In 2015, he earned the Certified Valuation Analyst (CVA) designation.

Jackie Goldstick, CFP® is the Director of Financial Planning at Core Wealth Management. She is a member of the National Association of Personal Financial Advisors (NAPFA) as well as the Financial Planning Association (FPA).