Due to financial hardship that predated the spread of the SARS-CoV-2 pandemic in March, I was forced to take two premature distributions from my Traditional IRA, one in January, the other in February, before starting a new job in March. I am under the age of 59 1/2 and to plan ahead for 2020 taxes, withheld an additional the anticipated 25% for tax and penalty.
I have read that the CARES act signed into law at the end of March allows for premature distributions taken as a result of the pandemic to have the 10% penalty waived and the tax liability spread over multiple years. However, since my distributions took place prior to the spread of the virus, would this provision apply to me?
Secondarily, I have heard that the CARES act allows for me to return distributions from a Traditional IRA before the tax deadline of July 15th without penalty or tax liability. I thought the rule was you only had 60 days from the date of distribution. I have saved enough over the last 4 months to return some of the amount taken to my Traditional IRA (or I could keep it as an emergency Fund). Is my understanding of the CARES act correct and I can return some of the money and avoid penalty and income tax?
In either case, I assume that whether I can waive the 10% early distribution penalty or return some of the distribution taken, the money withheld by my broker for the IRS would simply be applied to any 2020 tax liability when I file my 2020 taxes in 2021.
