Has the IRS expanded the definition of a ‘Qualified Individual’ as allowed by the CARES Act?

Yes, on June 19 In Notice 2020-50, 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. Eligible individuals now also include:

• Those whose pay or self-employment income is reduced due to the pandemic,
• Those who had a job offer rescinded or had a new job start date delayed due to COVID-19,
• Those whose spouse or a member of their household has experienced a financial hardship due to:
• A layoff, furlough, quarantine, reduced hours, reduced pay or self-employment income;
• Inability to work because of childcare unavailability; or
• A rescinded job offer or delay in the start date of a new job;
• Closure or reduction in hours of the business owned or operated by the participant’s spouse or a member of the participant’s household

The guidance provides a generous definition for a “member of the household”: 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.

For a complete list of qualified individuals, see Who is eligible to take a coronavirus-related distribution?

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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.