Who is eligible to take a coronavirus-related distribution?
The CARES Act defines a “qualified individual” as:
Coronavirus-related distributions are also available for beneficiaries of deceased participants and for alternate payees (former spouses) provided they themselves are a “qualified individual” as described above.
Further, in Notice 2020-50 published on June 19, the IRS, as authorized by the CARES Act, expanded the list of eligible individuals to include a wider group of those who have experienced financial hardships but did not previously qualify for the favorable disbursement terms. Additional eligible individuals include:
“Member of the household” is defined in the guidance as someone who shares the qualified individual’s principal residence, which encompasses a broad group of individuals such as a relative, roommate, significant other, or anyone else with whom the individual is sharing a home.
Because this provision applies to distributions made back to January 1, 2020, individuals who have already taken a coronavirus-related withdrawal are also exempt from the 10% early withdrawal penalty.
Cetera Retirement Plan Specialists is a third-party administrator and may not offer tax, legal or investment advice. Plan sponsors should consult their own tax, legal or investment professionals.