After a massive bipartisan effort, congress has passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act.  Among other things, the historic stimulus package waives the early withdrawal penalty on retirement account distributions for taxpayers facing virus-related challenges.

The CARES Act allows eligible participants to request penalty-free distributions of up to $100,000 for qualifying coronavirus-related reasons. These include adverse financial consequences due to being quarantined, furloughed, laid off or having work hours reduced; being unable to work due to a lack of childcare; or closing or reducing hours of a business owned or operated by the taxpayer.

CARES Act Distributions are more favorable than typical hardship withdrawals because:

  • Tax on the income from the withdrawal may be paid over a three-year period;
  • Participants may repay the amount withdrawn to an eligible retirement plan within three years;
  • Repayments will not be subject to the retirement plan contribution limits; and
  • All contribution sources (other than money purchase pension plan sources) will be available.


  • Expands unemployment insurance for workers, including a $600 per week increase in benefits for up to four months and federal funding of unemployment insurance benefits provided to those not usually eligible, such as the self-employed, independent contractors, and those with limited work history.
  • $350 billion allocated for the Paycheck Protection Program, which is meant to help small businesses (fewer than 500 employees) impacted by the pandemic and economic downturn to make payroll and cover other expenses from February 15, 2020 to June 30, 2020.
  • Small businesses may take out loans up to $10 million—limited to a formula tied to payroll costs—and can cover employees making up to $100,000 per year.  Loans may be forgiven if a firm uses the loan for payroll, interest payments on mortgages, rent, and utilities and would be reduced proportionally by any reduction in employees retained compared to the prior year and a 25 percent or greater reduction in employee compensation.
  • Provides $1,200 to Americans making $75,000 or less ($150,000 in the case of joint returns and $112,500 for head of household) and $500 for each child, to be paid “as rapidly as possible.”
  • Allocates $130 billion in relief to the medical and hospital industries, including for medical supplies and drug and device shortages.

To view the full text of the historic CARES Act, visit

For information on how to protect yourself and your loved ones against COVID-19, visit