Pre 59-1/2 IRA withdrawals without the 10% penalty

Submitted by Mobey on Thu, 2020-04-02 18:39

What are the requirements to avoid the 10% penalty on a pre 59-1/2 withdrawal from an IRA under the CARES act if done this year?



Submitted by Alan - IRA critic on Thu, 2020-04-02 19:19

You must qualify for a corona virus related distribution. Otherwise, there are the usual penalty exceptions you might qualify for that are still valid. To qualify for CV distribution:

  • Have been diagnosed with COVID-19;
  • Have a spouse or dependent who has been diagnosed with COVID-19;
  • Experience adverse financial consequences as a result of being quarantined, furloughed, being laid off, or having work hours reduced because of the disease;
  • Are unable to work because they lack childcare as a result of the disease;
  • Own a business that has closed or operate under reduced hours because of the disease; or
  • Meet some other reason that the IRS decides to say is OK.

 Given the laundry list of potential individuals who may qualify for relief under this provision, it seems rather clear that Congressional intent was to make this provision broadly available. The IRS will likely operate in kind, and take a liberal view of who has been impacted by the Coronavirus enough to qualify for a Coronavirus-Related Distribution. 

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