Potential 3 Year Indirect Rollover Period and 10% Penalty Avoidance on Qualifying Distributions From Retirement Plans – H.R. 748 SECTION 2202

10% Penalty for early withdrawal {I.R.C. §72(t)} shall not apply to COVID-19 related distributions

COVID-19 related distributions are :

1) distributions not exceeding $100,000 between January 1, 2020 and before December 31, 2020

AND

2) to an individual with a SARS-CoV-2 diagnosis for the individual, the spouse, or dependent,

OR

3) to an individual who experiences adverse financial consequences as a result of :

  1. being quarantined,
  2. being furloughed or laid off, or having work hours reduced due to such virus
  3. being unable to work due to lack of child care due to such virus
  4. closing or reducing hours of business owned by the individual due to such virus

 

You can choose to include this distribution in your income ratably over a three year period and it is not subject to the the 10% early distribution penalty.

Alternatively, you may contribute back the entire amount withdrawn, in one or more contributions, over the THREE year period starting with the date you received the first distribution and it will be treated as an indirect rollover of those funds if they were an IRA or as a trustee to trustee transfer if it was another eligible employer retirement plan.

Source : H.R. 748 Section 2202, pages 157 – 167

 

Archived from the Hot Topics page.. originally published 04/04/2020.

2020 Estimated Tax Payment Deadlines

Quarterly ES Payment Due Date Changes for 2020 : 

Typically, quarterly estimated tax payments are due April 15, June 15, September 15, & January 15.

April 15, is extended and due by July 15.

June 15, September 15, & January 15 remain due on those dates.

IRA and HSA Contribution Deadlines for 2020 : 

Typically, these payments are due by April 15, 2020 for the contributions to be deductible for the 2019 tax year.

 This April 15, is extended and these payments are due by July 15.

Source: https://www.irs.gov/newsroom/filing-and-payment-deadlines-questions-and-answers

 

Archived from the Hot Topics Page.. originally posted 04/04/2020

Employer Paid Leave Requirements : Families First Coronavirus Response Act

H.R. 6201, known as the Families First Coronavirus Response Act in Division E, requires employers to provide each employee paid sick time for specific reasons.  A link to the law : https://www.congress.gov/116/bills/hr6201/BILLS-116hr6201enr.pdf 

The Department of Labor’s outline to be more helpful to explain the bill in more practical terms.  https://www.dol.gov/agencies/whd/pandemic/ffcra-employer-paid-leave

Here is what the IRS published about this topic:  https://www.irs.gov/newsroom/treasury-irs-and-labor-announce-plan-to-implement-coronavirus-related-paid-leave-for-workers-and-tax-credits-for-small-and-midsize-businesses-to-swiftly-recover-the-cost-of-providing-coronavirus

 

2020 Tax Law Changes !!! Potential Delay in Estimated Tax Payment Dates !!!

POTENTIAL: Quarterly ES Payment Due Date Changes : Please stay tuned for updates because this bill has not become law and is subject to change.

Typically, quarterly estimated tax payments are due April 15th, June 15th, September 15th, & January 15th.

The current proposed bill put forth by the Republicans on March 19, 2020, allows for the first three payments (due April 15th, June 15th, September 15th) to be delayed and paid by October 15th.

Source: Senate Proposed “Coronavirus Aid, Relief, and Economic Security Act” or “CARES Act” : Section 2102(b)(1)