HARDSHIP DISTRIBUTIONS FROM 401(k), 403 (b), 457 (b) PLANS AND IRAs : Effective on signing by the President (Friday, March 27, 2020), hardship withdrawals of up to $100,000 are allowed from CODA-type plans and IRAs. Taxes on the withdrawal amount would still be due, but those under age 59.5 would not pay the 10 percent early withdrawal penalty. Taxes could be paid over three years, rather than all in the first year. To qualify for the withdrawal, the participant or his or her spouse must have been diagnosed with the Coronavirus or lost income due to a layoff, business closure, quarantine, reduction in hours, or inability to work due to a lack of child care services. The administrator of the plan may rely on the employee’s certification that the employee satisfies one of these conditions. Alternatively, the participant can re-deposit the money back into the CODA-type plan or IRA within three years and skip the tax payments, even if the amount redeposited is more than the annual contribution limit of the plan or IRA.
IRA CONTRIBUTIONS DEADLINE EXTENDED: The IRA contribution deadline has been extended to July 15, 2020 (or the same deadline for filing of income tax returns).
LOANS FROM 401(k) PLANS: Loans can now be made for the next six months from 401(k) plans to the lower of $100,000 or 100% of the vested account balance. (Comment: This is an increase from the lesser of the $50,000 dollar limit or 50% of the vested account balance.) In addition, participants with 401(k) loans-new or existing- can extend repayment due in 2020 for a year.
REQUIRED MINIMUM DISTRIBUTIONS (RMDs): Retirees can delay taking RMDs from all qualified plans and IRAs for the year 2020. People who have inherited 401(k)s, IRAs, or Roth IRAs can also suspend distributions in 2020. (Comment: Remember that the age to begin RMDs was extended from age 70.5, for those individuals born before July 1, 1940, to age 72, for those individuals born after June 30, 1949 in the 2017 Tax Cuts and Jobs Act. That Act also did away with “stretching” of inherited 401(k)s- all retirement plan distributions - and IRAs except for “eligible designated beneficiaries” or “EDBs”.)
*Coronavirus Aid, Relief, and Economic Security of 2020 or CARES Act 2020 (Comment: Isn’t that cute!!!)
5105 DTC PKWY Ste 316
Greenwood Village, Colorado 80111 United States
5105 DTC PKWY Ste 316
Greenwood Village, Colorado 80111 United States