I've only found this one article related to penalty-free, early retirement withdrawal (or lack thereof) after COVID-19 Relief 2021 which means no more Covid Relief Distributions from retirement plans are permitted. But was wondering if there was any more info since this article was published on Dec. 31, 2020. It hinted at there being, potentially, some additional provisions. If anyone has any info, I'd love to learn more.
According to the article, penalty-free, early retirement withdrawal provisions are only allowed under Qualified Disaster Relief areas. Covid-related reasons are no longer permitted.
"Congress, in COVIDTRA, passed new legislation creating a similar retirement plan distribution exception called the Qualified Disaster Distribution. This allows for a similar set up as the CRD – up to $100,000 aggregate per qualified disaster can be withdrawn from retirement accounts and avoid the 10% penalty tax.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. The QDD would need to be distributed by June 25, 2021, for a disaster that occurred between December 28, 2019, and December 27, 2020. The IRS has recently added instructions for anyone looking to report a CRD or a QDD for 2020 here.
...The lack of retirement planning provisions also raises a question, at least in my mind, if Congress is preparing a retirement-related bill early in 2021. A bi-partisan bill was floated just a few months ago that could come back in 2021. This would make sense, perhaps, if it signals a desire for a larger retirement bill in the near future."
