A person has a 401K plan with a previous employer and has an outstanding loan initially taken out in 2018. She leaves this employer in January of 2020 with a portion of the loan still unpaid. She continues to write checks to payback the loan while no longer employed. Prior to leaving, the loan payback was being deducted from her paychecks. Due to forgetfulness and misunderstanding she discontinues writing checks to pay back the loan. The plan custodian, Vanguard in this case, declares the loan payback in default and does a plan offset and declares that $30,000+ distribution has been made to cover the outstanding balance of the loan on 9/11/20. The plan participant contracts Covid in December of 2020. She recently taps her home equity line of credit to put the unpaid loan balance money into an IRA in order to avoid the taxation and the 10% penalty, however it’s too late. She’s well beyond the 60 day RO period. Is she eligible to avoid the taxes and 10% penalty under the CARES Act because she is a “qualified individual” because of contracting Covid and is eligible to repay the plan offset? If she is, and she puts the loan amount into her own personal IRA prior to the end of 2020, how does she handle this on her taxes for 2020?