According to Jamie Hopkins at Forbes, it seems the new legislation does allow for a early penalty free withdrawal as a "Qualified Disaster Distribution." Refer below. It seems it expires in late Feb. However, am I reading this wrong?
"Congress, in COVIDTRA (COVID-Related Tax Relief Act of 2020), passed new legislation creating a similar and permanent retirement plan distribution exception called the Qualified Disaster Distribution. This allows for a similar set up as the CRD (2020 IRA withdrawal rules) – up to $100,000 aggregate per qualified disaster can be withdrawn from retirement accounts and avoid the 10% penalty tax. The amounts can be repaid and be treated as an eligible rollover any time during the three-year period beginning on the day after the distribution was taken.
The amount will be treated as taxed over a three-year time period unless the taxpayer elects to have it taxed in the distribution year. Additionally, if this distribution is coming from a qualified employer plan like a 401(k), it is not subject to the normal 20% mandatory withholding rules if properly identified as a qualified disaster distribution. Instead of focusing on COVID-19 impact like with the CRD, to qualify under COVIDTRA you must have primarily resided in a qualified disaster area and you must have sustained an economic loss from the qualified disaster."
