For 2020 the IRS has an exemption for the early withdrawl penalty from retirement accounts due to disasters - and COVID is one. Some people have told my client that they didn't pay tax on this distribution. I've told my client they have to pay the tax but not the penalty, which Proseries has calculated. I've used the 3 year option to spread the income. Is it possible that they don't have to pay any tax on this distribution? They were less than $100,000.