The CARES Act (P.L. 116-136) was signed into law on Friday, March 27 and, yes, it does provide relief from the 10% penalty for taking early distributions from retirement accounts in qualifying cases.
Section 2202(a) of the Act provides for penalty-free withdrawals from retirement plans of up to $100,000 for "coronavirus-related" distributions as described in the Act. This applies to distributions taken in 2020.
Generally, to qualify as a coronavirus distribution, the recipient must be affected by coronavirus. Under the CARES Act, an individual is considered affected if the individual is diagnosed with coronavirus, has a spouse or a dependent who is diagnosed with coronavirus, or has experienced adverse financial consequences due to coronavirus as a result of being quarantined, laid off, having had work hours reduced, or, in the case of the owner of business, having to close or reduce hours of the business. To qualify, the distribution must be made during 2020. Please refer to the Act at Section 2202 (a)(4) below for more details.
While qualifying coronavirus distributions are generally exempt from the additional 10 percent early withdrawal penalty tax, they are still includable in taxable income. However, the CARES Act provides that any amount received as a coronavirus distribution may be taken into gross income ratably over a three-year period beginning in 2020, at the taxpayer's election. Please see Section 2202(a)(5) for more details.
Please see pages 60-61, SEC. 2202. SPECIAL RULES FOR USE OF RETIREMENT FUNDS: https://www.congress.gov/…/bills/hr748/BILLS-116hr748enr.pdf.