CARES Act Distributions

Today we’re talking more about forecasting during the pandemic. Check out our YouTube channel and this article from The Tax Adviser for more on the topic!

Let’s talk some more about corporate taxes! It seems that there is no end to things that were included in the CARES Act last spring. The Act actually changed and liberalized some of the rules around a distribution you might get from your retirement account, be it a formal business 401(k) type account or your personal IRA.

Generally, if you take a distribution from your retirement account, you either have 90 days to repay it, or, if you’re below the age of distribution, you’ll pay a 10 percent penalty tax on it. Now, if you are a person who’s been diagnosed with COVID-19, or there’s someone included on your tax return that you’ve had to care for, a dependent or spouse, then you can take that distribution without penalty, or you can extend your repayment period from 90 days to three years.

This is really just another on the long list of things the government passed through to help people get through this time. The distributions are limited to a hundred thousand dollars, which is similar to the amount of salary that would be used in computing your PPP loan. Just something to think about!

If there’s anything Harvard Grace can do for your business, let us know.

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