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The COVID Crisis Is a Great Time to Start Your Business

Updated: Jul 12, 2022

President Kennedy famously said that “[i]n the Chinese language, the word “crisis” is composed of two characters, one representing danger and the other, opportunity.” Hidden among the 880 pages of the recent stimulus law is opportunity for anyone thinking of starting a new business and using retirement funds as seed money.

The new law creates a new emergency retirement plan distribution option dubbed the “coronavirus related distribution,” or “CRD” for short. A CRD can be drawn from an employer sponsored retirement plan such as a 401(k) or from individual retirement accounts (IRAs), in any amount up to $100,000. Under the terms of the CARES Act, the normal 10% penalty tax levied on early plan distributions by the Internal Revenue Service (IRS) is waived.

Furthermore, the individual taking a CRD can spread the reported income over three years for tax purposes, and the distribution also can be repaid within three years to avoid taxation.

To take advantage of the CRD, participants will have to self-certify that they either have contracted the COVID-19 disease, that a spouse or dependent has done so, or that they have lost a job or been furloughed or otherwise suffered a heavy financial burden because of the coronavirus pandemic. Other provisions in the law double the amount of loans that participants can take—from $50,000 to $100,000—and extend outstanding loan repayment periods.

One of our Business Attorneys can help you start your business and start realizing your dreams of being a business owner.


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