You can say a lot of unkind things about the Internal Revenue Service and the assorted financial powers that be. However, you can’t say they’re not thorough and you can’t say they’re not fast (when they want to be). For example, in mid-March, when most of us were searching for toilet paper and looking down the barrel of layoffs, the IRS was busily writing guidance plans regarding the Coronavirus Aid, Relief and Economic Security (CARES) Act.

Minutes after being furloughed, people with Individual Retirement Accounts were, no doubt, uneasily eyeing those accounts and doing some sacrificial arithmetic. Considering house, car and child expenses, looting that IRA would have seemed the only option to keep the bigger wolves from the door. However, if under the age of 59 ½, these folks would have had to resign themselves to not only paying a 10 percent early withdrawal penalty, but then also having these premature funds included in their gross income ( Many reluctant fingers dialed financial institutions intending to cash out – needs must when the Devil drives, after all.

And right about here is where the IRS’ thorough contingency planning comes into play. Even before the virus descended, the IRS wasn’t completely heartless; there were certain situations that allowed for taxpayers to go unpenalized after early withdrawals of retirement money. For example, if a taxpayer became disabled, adopted or gave birth to a child, had to pay for tuition or unexpected medical bills, the IRS was willing to forgo that 10% penalty ( Now that Corona has disrupted day-to-day living, the IRS is offering even more altruism.

For “qualified individuals,” the rules have changed. If you have been diagnosed with COVID-19, have a spouse/dependent diagnosed or have been suffering monetary consequences as a result of the VID (laid off, lost child care, reduced hours, etc.), you count as a qualified individual (EA Journal, Vol. 39, No.5) and are eligible for free prizes! Under the CARES Act, you can now take an early distribution of up to $100,000 with no penalty in sight. This money will be counted as income, but “ratably over a three-year period,” unless elected otherwise. In addition, this money won’t be subject to the mandatory and normal 20 percent withholding rule (EA Journal, Vol. 39, No.5). Of course, you are welcome to voluntarily withhold, which would probably make things more orderly in the long run.

Another neat addition within the CARES Act has to do with required minimum distributions. Before these exciting times, those required to take a distribution (age 72 for 2020), HAD to take a distribution. If you didn’t take that cold, hard cash before December 31 of each year, you got bopped with a “50% excise tax on the amount not distributed” ( Depending on your account, that could be quite a wrist-slap. However, seeing as our stock market has been taken to the woodshed, the CARES Act is waiving RMD requirements for this year. But what if you’ve spent the last year on a tropical island paradise, far away and unaffected by the travails of the virus? That’s all right! You do not have to be a “qualified individual” to make use of this perk – this is available to everyone required to take a distribution.

Whatever your opinion of our financial authorities might happen to be, you must give credit where credit is due. During these desperate times, guidance and safety nets have been constructed. Your house and your retirement are safe for now, so at least that’s one thing you can stop worrying about.

The IRS is quick, but your Bourke Accounting tax preparers and bookkeepers are keeping up. As soon as a new regulation makes the scene, your Bourke Accounting pro knows about it. When you sit down with a Bourke Accounting expert, rest assured that the facts are known and the advice is solid.

Come see us any time. Our number is 502-451-8773 and don’t forget to visit our website at See you soon!

Written by Sue H.