Are Coronavirus-Related Distributions Available in 2021?
























Episode 119 - Don't confuse Qualified Disaster Distributions (QDDs) with Coronavirus-Related Distributions (CRDs), which ended in 2020. A QDD is available only for non-COVID-19-related major disasters, such as hurricanes, wildfires, severe storms and other disasters. Learn more here, including the qualifications required to take a QDD.

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Transcript of Podcast Episode 119
Distributions from an IRA or qualified retirement plan made prior to the participant attaining the age of 59½ years will typically result in a 10 percent tax penalty. However, in 2020 as a result of the COVID-19 pandemic, many people struggled financially because of job loss, furlough, childcare issues, sickness and more. Then on March 27, 2020, the Coronavirus Aid, Relief and Economic Security (“CARES”) Act was signed into law. One of the many pandemic-relief provisions in the CARES Act allowed distributions to be made to individuals under the age of 59½ years from their IRAs and qualified retirement plans of up to $100,000 in the aggregate without penalty, so that struggling Americans could make ends meet. While taxes would still be owed on these distributions, the taxes could be spread out over a three-year period. In addition, the distributions could be recontributed back into the IRA or retirement plan within three years. These coronavirus-related distributions (“CRDs”) were authorized through December 30, 2020.
With the continuing pandemic, additional relief was provided through the Consolidated Appropriations Act, 2021 (“CAA, 2021”) signed into law on December 27, 2020. While the CAA, 2021 added a provision to allow for CRDs to be taken from money purchase pension plans, which were not included in the CARES Act, it did NOT extend the CRD provisions into 2021.
When the pandemic raged into 2021, many Americans were under the belief that CRDs were still available in 2021. After all, many workers remain unemployed, businesses remain shuttered or operating at reduced capacity, and general financial hardship abounds. While it is possible that the Biden Administration and Congress will reconsider this issue and extend the CRDs, a provision of the CAA, 2021 that has not received great media attention has contributed to the confusion. The provision is very similar to CRDs, but with some key differences. These distributions are known as Qualified Disaster Distributions (“QDDs”). Adding to the confusion is that the CAA, 2021 includes sections with their own suggestive titles, including the COVID-Related Tax Relief Act of 2020 and the Taxpayer Certainty and Disaster Relief Act of 2020 (“TCDRA”). The QDD provisions are located in Title III of the TCDRA.
The qualifications to obtain a QDD are complicated. Before a QDD can be made, the following must occur:




A declaration by the President of a major disaster pursuant to the Robert T. Stafford Disaster Relief and Emergency Assistance Act, during the period beginning on January 1, 2020, and ending on the date 60 days from the enactment of the act (i.e., February 25, 2021), if the “incident period” began on or after December 28, 2019, and on or before the date of the enactment of the Act (i.e., December 27, 2020).
The “incident period” is the period of the qualifie...