March 27, 2020

COVID-19 stimulus and penalty-free withdrawals up to $100,000 from 401k/403b/IRA : financialindependence

COVID-19 stimulus and penalty-free withdrawals up to $100,000 from 401k/403b/IRA : financialindependence

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“Savers under age 59½ would be able to tap their 401(k) and 403(b) money without the usual 10% early withdrawal penalty. This would also apply to individual retirement accounts.”

“Normally, if you were to take money from your retirement plan, you would be subject to a 10% penalty if you’re under age 59½, along with income taxes on the amount you’re withdrawing.

The relief bill gives you the opportunity to pay the taxes over the course of three years. You can also replenish the amount that you pulled from your retirement account over that time.

These distributions may be taken by people who themselves are diagnosed with coronavirus, or whose spouse or dependent has been diagnosed with COVID-19, or who experience adverse financial consequences from being quarantined, laid off or furloughed.”

From https://www.cnbc.com/2020/03/23/congress-may-let-you-take-100000-from-your-401k.html

Isn’t this a huge opportunity for the FI/RE minded who may be in low taxable income years? Similar to doing Roth conversions from an IRA but without the 5 year waiting period before spending the converted principal?

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