Marsha2020
Level 3
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Need an opinion.  I've read the IRS guidance for Covid.  Pretty much everyone in the US was effected, right?  I have a client who took $60K from 401K, over 59 1/2 and still works.  Her Covid reason is son lost job who lives with her, so increased costs, lost a higher paying job, and her bills increased.  Is it safe to take that over 3 years.  

I don't understand how loose or tight these covid rules are looked at by the IRS.  Opinions, please.

 

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pamdory
Level 7
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This page on irs.gov does a good job of answering a lot of the issues around this.

https://www.irs.gov/newsroom/coronavirus-relief-for-retirement-plans-and-iras

The second item on the page deals with the specifics of who gets the relief.

qbteachmt
Level 15
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No, not everyone was impacted. On this forum, we've seen where people are preparing a tax return for someone who did not go out of business, made more in 2020 than in prior years, did not get sick, and still took a distribution deciding to take advantage of the provision that didn't apply to them. Since the taxpayer can self-certify, though, there's not much to be done about that.

"Her Covid reason is son lost job who lives with her,"

Read Form 8915-E instructions:

"3.You experienced adverse financial consequences as a result of you, your spouse, or a member of your household (as defined next)"

"Member of your household. For purposes of determining whether you are a qualified individual, anyone who shares your principal residence is a member of your household."

 

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BobKamman
Level 14
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It's certainly encouraging that these people have faith that the new Administration is not going to increase tax rates for them in the next two years.  It was a clever maneuver by the last Administration to encourage withdrawals of funds that otherwise might not be taxed for decades.