The IRS has prolonged relief to plan participants whose significant others are laid off and take COVID-19-related loans or distributions from their retirement accounts, as well as offered novel safe harbors for loan repayments.
Per Notice 2020-50 launched on June 19, the Internal Revenue Services offered guidances and instances of how qualified persons will reflect their tax treatment of coronavirus-related loans and distributions on federal income tax filings. The Notice expanded the CARES Act’s classification of who is deemed eligible to include additional adverse financial consequences arising from the pandemic and extended that definition to a significant other or household member. Per the guidance, a qualified person is anyone who:
- is determined to have, or whose spouse has, COVID-19 by a test approved by the Centers for Disease Control and Prevention;
- experiences adverse financial consequences from COVID-19, including being unable to work due to lack of childcare, being quarantined, having reduced work hours, laid off or furloughed, having self-employment income reduced or having a job offer rescinded or start date for a job delayed.
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