From my understanding, financial hardships related to COVID-19 can qualify an individual to withdraw money from their 401k, with literally no penalty so long as it is repayed to a similar retirement account within 3 years.
What qualifies as a COVID hardship?
In my friends case, he lives at home with 3 people with preexisting conditions that make them vulnerable, they are also 60, 83, and 85 years old. He also has to work from home now, so a combination of factors makes moving out more appealing (Reduce risk to family, and have a place to work comfortably and efficiently from home so that his job is secure, instead of the current situation where 4 people and 4 dogs share 975 sq feet, and he can be interrupted during meetings and heavily distracted while working)
My friends bank account was essentially cleaned out in a bad divorce, but he has over $60,000 in his 401k and income such that he could withdraw 25,000 for a down payment and a preowned car, and realistically could repay that withdrawal in under 13 months (certainly within the 3 years set forth by the CARES Act)
Would this qualify as a covid related hardship? Certainly the parents and grandparents could deem it too dangerous to be exposed and kick him out, and would it be a hardship then?
To clarify, he has not lost his job, and noone in his family has caught covid-19, but it is putting a strain on his ability to work, and exposing vulnerable parties.