CRD’s for cancer patients
Two clients, one a doctor and the other a nurse.
Doctor had his last chemo treatment approximately the time COVID struck. He was told by his cancer doctor that going back to work would very likely kill him if he contracted the virus. He withdrew $50k from his work retirement, and is still on, in essence, a leave of absence. Would he be eligible for the special CRD treatment on his withdrawal?
Almost same scenario with nurse at different hospital. COVID hit right after her last chemo treatment. She and her husband were scared for her health due to her suppressed immune system, so she quit work and closed out $25-30k of her workplace retirement. After six months or so, she has gone back to working in a hospital setting again. Would she qualify given these circumstances?
Permalink Submitted by Alan - IRA critic on Fri, 2021-03-19 16:20
Technically, they do not qualify per Notice 2020-50. Fear of Covid is not one of the listed qualifications, nor is quiting work under medical orders. The reduction of pay should be involuntary. They should have explained this to their employers and might have been able to secure a furlough notice from the employer under the circumstances. If either left work due to lack of needed childcare as even a partial reason, that would also qualify. Same if either had a spouse that qualifies. Barring either of these, they do not appear to qualify. Perhaps payment of high medical costs over 7.5% of AGI would waive the penalty on some of the distribution. Other penalty waivers should also be checked out. If they want to be real aggressive, they might take the position that the reduction of pay was caused by Covid even though it was voluntary. I don’t expect the IRS is going to request documentation for CRD claims, particularly by those in the medical field.