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October 28, 2020 · OPINION

CARES Act allows 401(k) distributions tax-free

By Lee Smith
Midland

According to an Internal Revenue Service news release, you can withdraw up to $100,000 from your employer-sponsored 401(k), your self-employed IRA or other retirement accounts penalty-free, with federal taxes spread out over three years or, if pay it back within three years, you can file an amended return and get the federal taxes you paid back.

The rules as to who qualifies are very open, and it does look like most people can qualify. It is self-certified.

Click here for an explanation from the IRS.

The reason I am providing this information is that I am not seeing very much in the news media about this CARES Act access to your 401(k).

If you have $100,000 or less in a retirement account, no matter what your age, then you can get this money and use it as you see fit. Most people will qualify. Then you have three years to claim it as a 401(k) distribution and spread your taxes out. You are not required to have taxes withheld when you get your money.

Please, note that I am not a financial advisor nor do I have any business interests in providing financial advice. If you have any questions you should thoroughly review the IRS Cares ACT information and/or get financial advice from your investment advisor for your 401(k) and your own financial advisor.

I am providing this information as a private citizen.

Good luck
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Tom LaHaye · October 30, 2020 at 1:09 pm
Penalty free and tax free are very different things
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