Are COVID withdrawals a way to get funds out of my costly 401(k)?
Updated Feb 16, 2021;
Q. If I took a COVID withdrawal from my 401(k), I know there is no income tax due if it’s paid back to a qualified retirement account within three years. Is it correct that I don’t have to pay it back to my 401(k), which has horrendous fees? I’m thinking this could be a strategy to get the funds into an IRA. Investor
Let’s go through how this all works.
Penalty-free distributions taken from qualified accounts under the CARES Act needed to be taken by Dec. 31, 2020 and only qualified individuals were eligible to take them.
Monday, January 11, 2021
Besides the COVID-19 pandemic, 2020 has also had its share of other disasters, including hurricanes, floods and fires.
The Consolidated Appropriations Act, 2021 (the “CAA”) has provisions that are designed to provide tax relief for individuals and employers who have been adversely affected by one of the numerous federally declared “Qualified Disasters”.
These provisions of the CAA are found in Sections 301 through 306 of Title III, of Division EE, which is called “The Taxpayer Certainty and Disaster Relief Act of 2020” (the “2020 Tax Relief Act”).
In this blogpost, we will focus on Sections 301 through 303 of the 2020 Tax Relief Act, which address (i) tax-qualified retirement plans, and (ii) employee retention tax credits for employers.