Waiver of 10% Early Distribution Penalty

The additional 10% tax on early distributions from IRAs and defined contribution plans (such as 401(k) plans) is waived for distributions made between January 1, 2020 and December 31, 2020 by a person who (or whose family) is infected with the Coronavirus or who is economically harmed by the Coronavirus (a qualified individual).  Penalty-free distributions are limited to $100,000, and may, subject to guidelines, be re-contributed to the plan or IRA.  Income arising from the distributions is spread out over three years unless the employee elects to turn down the spread out of the income.  Employers may amend defined contribution plans to provide for these distributions.  Additionally, defined contribution plans are permitted additional flexibility in the amount and repayment terms of loans to employees who are qualified individuals.