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What qualifies as a “coronavirus-related distribution” from a retirement plan?

As you may have heard, the Coronavirus Aid, Relief and Economic Security (CARES) Act allows “qualified” people to take certain “coronavirus-related distributions” from their retirement plans without paying tax. So how do you qualify? In other words, what’s a coronavirus-related distribution?

Early distribution basics

In general, if you withdraw money from an IRA or eligible retirement plan before you reach age 59½, you must pay a 10% early withdrawal tax. This is in addition to any tax you may owe on the income from the withdrawal. There are several exceptions to the general rule. For example, you don’t owe the additional 10% tax if you become totally and permanently disabled or if you use the money to pay qualified higher education costs or medical expenses.

New exception

Under the CARES Act, you can take up to $100,000 in coronavirus-related distributions made from an eligible retirement plan between January 1 and December 30, 2020. These coronavirus-related distributions aren’t subject to the 10% additional tax that otherwise generally applies to distributions made before you reach age 59½. What’s more, a coronavirus-related distribution can be included in income in installments over a three-year period, and you have three years to repay it to an IRA or plan. If you recontribute the distribution back into your IRA or plan within three years of the withdrawal date, you can treat the withdrawal and later recontribution as a totally tax-free rollover. In new guidance (Notice 2020-50) the IRS explains who qualifies to take a coronavirus-related distribution. A qualified individual is someone who: Is diagnosed (or whose spouse or dependent is diagnosed) with COVID-19 after taking a test approved by the Centers for Disease Control and Prevention (including a test authorized under the Federal Food, Drug, and Cosmetic Act); or Experiences adverse financial consequences as a result of certain events.

To qualify under this test, the individual (or his or her spouse or member of his or her household sharing his or her principal residence) must: Be quarantined, be furloughed or laid off, or have work hours reduced due to COVID-19; Be unable to work due to a lack of childcare because of COVID-19; Experience a business that he or she owns or operates due to COVID-19 close or have reduced hours; Have pay or self-employment income reduced because of COVID-19; or Have a job offer rescinded or start date for a job delayed due to COVID-19.

Favorable rules

As you can see, the rules allow many people — but not everyone — to take retirement plan distributions under the new exception. If you decide to take advantage of it, be sure to keep good records to show that you qualify. Be careful: You’ll be taxed on the coronavirus-related distribution amount that you don’t recontribute within the three-year window. But you won’t have to worry about owing the 10% early withdrawal penalty if you’re under 59½. Other rules and restrictions apply. Contact us if you have questions or need assistance. © 2020

Helpful Articles

Employer Retention Credits

Valuable tax credits are available to employers to help mitigate the effects of the COVID-19 pandemic. But amid the chaos of the last few months, it may be hard to navigate the details of how to qualify for the credits. To help, the IRS has created a flowchart that explains the details of the Employer Retention Credit.

Also included in the document is a Leave Credits chart, which breaks down eligibility for paid sick leave and paid family leave credits by the employee’s situation. Employers can use the charts to determine whether they’re eligible for the credits, the amount of the credits, and which wages apply to the credits.

Here are the two charts:

Press Releases

ATA Named RAY Award Recipient

ATA was named first-place winner for the 2020 Risk Achievement of the Year (RAY) Award from Berkley Accident & Health for outstanding commitment to health risk management. The RAY Award represents a vested commitment to improving company health and wellness. ATA is committed to creating a space for employees to feel happy and productive.  In 2019, ATA received honorable mention.

There are numerous initiatives ATA has implemented to keep employees engaged and help increase productivity.  ATA also implemented a health savings account plan with a portion funded by the firm.  The firm implemented wellness challenges to encourage self-care, mindfulness, and relieve stress.  ATA also engaged over 25 businesses in all 14 markets to promote community wellness by giving to local backpack programs for schools and non-profit organizations.  During the holidays, ATA team members received a “Healthy Holidays Cookbook” to support nutritious choices.

ATA promotes a healthy workplace so employees’ happiness, productivity and overall well-being are amplified. The firm will continue to encourage healthy behaviors and seek innovative wellness initiatives.  To learn more about the RAY Award by Berkley Accident and Health, visit their website at

Financial News Helpful Articles

PPP Flexibility Update

PPP Flexibility Update

The PPP Flexibility Act recently passed the House and Senate and has been signed by the President.  This bill allows greater latitude for Paycheck Protection Program borrowers. This means PPP loan recipients are granted more time and greater flexibility to utilize their funds while remaining eligible for loan forgiveness.

‌Key Updates

Current PPP borrowers can choose to extend the eight-week period to utilize the funds to twenty-four weeks, or they can keep the original eight-week timeframe. 

New PPP borrowers will have a 24-week covered period, but the covered period cannot extend beyond December 31, 2020. This flexibility is designed to make it easier for more borrowers to maximize their loan forgiveness. Businesses now have five years to repay the loan instead of two with the same interest rate at 1%.

The maturity on previous PPP loans is not automatically extended but may be extended by mutual agreement of the lender and the borrower. 

In the previous PPP loan agreement, borrowers had to devote a minimum of 75% to payroll expenses. Under the PPP Flexibility Bill, borrowers must spend at least 60% on payroll and no more than 40% for payments of interest on covered mortgage obligations, rent and utilities.

This update includes additional exceptions which should help borrowers reach full PPP loan forgiveness:

  1. The forgiveness amount will not be reduced if an employer can document an “inability to rehire individuals who were employees of the eligible recipient on February 15, 2020”; and, “an inability to hire similarly qualified employees for unfilled positions on or before December 31, 2020”.
  2. The borrower is able to document an inability to return to the same level of business activity as such business was operating at before February 15, 2020, due to compliance with requirements related to Covid-19 related operating restrictions.

We continue to monitor the details and guidelines as they unfold, contact your CPA for answers. Please visit our COVID-19 resource page for more information or visit Paycheck Protection Flexibility Act for more information.

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Tennessee Business Relief Program Issues $200 Million in Coronavirus Relief Funds

The State of Tennessee is making $200 million available for small businesses through the Tennessee Business Relief Program. The relief funds are intended for businesses that suffered during the mandatory business closures in the midst of COVID-19 shutdowns. 

More details are to come, but the relief program anticipates about 28,000 Tennessee small businesses to qualify, with more than 73% of those businesses earning annual gross sales of $500,000 or less. Allocations are based on the annual gross sales of the business.

Eligible Businesses
  • Barbershops
  • Beauty shops
  • Nail salons
  • Tattoo parlors, spas, and other personal care services
  • Gyms and fitness centers
  • Restaurants
  • Bars
  • Hotels and other travel accommodations
  • Theaters, auditoriums, performing arts centers and similar facilities
  • Museums, zoos, and other similar attractions
  • Amusement parks
  • Bowling centers and arcades
  • Marinas
  • Amusement, sports and recreational industries
  • Promoters of performing arts, sports, and similar events
  • Agents and managers of artists, athletes, and entertainers
  • Independent artists, writers, and performers
The Following Small Businesses May Qualify

Furthermore, the following small businesses may qualify if their sales were at least 25% lower on their April sales tax returns, which should have been filed in May:


  • Furniture stores
  • Home furnishing stores
  • Clothing stores
  • Shoe stores
  • Jewelry, luggage, and leather goods stores
  • Sporting goods, hobby, and musical instrument stores
  • Book stores
  • Department stores
  • Office supply, stationery and gift stores
  • Used merchandise stores
  • Other miscellaneous stores

ATA is keeping up-to-date on details as they are released. You can visit our COVID-19 Resource Page for information.  Visit Tennessee Business Relief Program for FAQ about the funds. 

We are here to help in this unprecedented time. Contact your CPA for more information.