The CARES Act allows for withdrawals from a 401k to not be assessed with the additional 10% penalty for early withdrawal if under the age of 59 1/2. The payments can be spread over a three year period so that the impact of the additional income will not be felt in one year. This will be taxed as ordinary income at the tax rate for your AGI. The 401k funds can also be repaid over a three year period.
At this point in time the Form 8915-E (Qualified 2020 Disaster Retirement Plan Distributions and Repayments (Use for Coronavirus-Related Distributions)) is not finalized. We currently do not have an estimated date when the form is ready.
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