The IRS today released an advance version of Notice 2020-50 as guidance relating to measures of the “Coronavirus Aid, Relief, and Economic Security Act” (CARES Act) (Pub. L. No. 116-136) that provide favorable tax treatment in response to the coronavirus (COVID-19) pandemic for individuals who take certain distributions from eligible retirement plans that are “coronavirus-related distributions.”
Read Notice 2020-50 [PDF 91 KB]
The guidance in Notice 2020-50 is intended to help retirement plan participants affected by COVID-19 to take advantage of the CARES Act provisions. These measures provide enhanced access to plan distributions and plan loans, include expanded categories of individuals eligible for these types of distributions and loans (“qualified individuals”), and include examples on how qualified individuals will reflect the tax treatment of these distributions and loans on their federal income tax filings.
The CARES Act (enacted March 27, 2020) allows qualified individuals receive favorable tax treatment with respect to distributions from eligible retirement plans that are coronavirus-related distributions. As explained by today’s IRS notice, a coronavirus-related distribution:
A provision of the CARES Act also increases the allowable plan loan amount under section 72(p) and permits a suspension of payments for plan loans outstanding on or after March 27, 2020, that are made to qualified individuals.
Notice 2020-50 is also intended to assist employers and plan administrators, trustees, and custodians and qualified individuals by providing guidance on how plans may report coronavirus-related distributions and how individuals may report these distributions on their individual federal income tax returns.
Read a related IRS release—IR-2020-124 (June 19, 2020)—that further explains:
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