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CARES Act 2021 (or similar) and Retirement Account Penalty Waiver
Posted on 11/1/20 at 2:07 pm
Posted on 11/1/20 at 2:07 pm
Has anyone on here looked into whether the 2020 waiver of the 10% penalty for premature IRA/401(k) withdrawal (huh huh, Beavis; aka distribution before 59.5yo) is rumored to be extended for 2021 tax year, assuming there's a new "stimulus" bill?
I googled and found nothing. I'm sure there's some accounting/tax law geek forum somewhere that has discussed it, but I'm not privy to such things.
TIA
I googled and found nothing. I'm sure there's some accounting/tax law geek forum somewhere that has discussed it, but I'm not privy to such things.
TIA
This post was edited on 11/1/20 at 2:08 pm
Posted on 11/1/20 at 2:32 pm to McLemore
I would try to pull out the cash before December 31st.
Posted on 11/1/20 at 4:20 pm to tenderfoot tigah
quote:
I would try to pull out the cash before December 31st
Yeah that was the plan. I went to all cash in my trading IRA in Sept, and it's ready to withdraw at click of a button.
But I have a separate potential LTGC reason (timing some low brackets) to not take the distribution in 2020.
I know you can pay it back in within three years and amend returns but that would create a #CF.
This post was edited on 11/1/20 at 5:47 pm
Posted on 11/2/20 at 2:58 pm to McLemore
I've given up trying to predict what this Congress will do with regards to stimulus. Nothing is done until it's signed.
Keep in mind you do have to qualify. It's not automatic.
With these types of issues, I always tell my clients I am conservative. I would not plan on it being there in 2021. if it is, great, but we can't plan on that at this time.
Keep in mind you do have to qualify. It's not automatic.
With these types of issues, I always tell my clients I am conservative. I would not plan on it being there in 2021. if it is, great, but we can't plan on that at this time.
Posted on 11/2/20 at 4:21 pm to LSUFanHouston
quote:
Keep in mind you do have to qualify. It's not automatic.
How is it determined whether or not an individual qualifies?
Posted on 11/2/20 at 5:55 pm to cmlsu
The relief only applies in the event the distribution is an approved CRD, as defined under IRS Notice 2020-50 as:
•an individual (or the spouse or a dependent of that individual) who is diagnosed with COVID-19 or SARS-CoV-2 in an approved test;
•a spouse or a member of the individual’s household being:
-quarantined, furloughed or laid off or having work
hours reduced due to COVID-19
-being unable to work due to lack of childcare due to
COVID-19
-having a reduction in pay due to COVID-19;
-having a job offer rescinded or start date for a job
delayed due to COVID-19;
-closing or reducing hours of a business owned or
operated by the individual’s spouse or a member of
the individual’s household due to COVID-19
•or an individual who suffers from other factors as determined by the Secretary of the Treasury.
•an individual (or the spouse or a dependent of that individual) who is diagnosed with COVID-19 or SARS-CoV-2 in an approved test;
•a spouse or a member of the individual’s household being:
-quarantined, furloughed or laid off or having work
hours reduced due to COVID-19
-being unable to work due to lack of childcare due to
COVID-19
-having a reduction in pay due to COVID-19;
-having a job offer rescinded or start date for a job
delayed due to COVID-19;
-closing or reducing hours of a business owned or
operated by the individual’s spouse or a member of
the individual’s household due to COVID-19
•or an individual who suffers from other factors as determined by the Secretary of the Treasury.
Posted on 11/2/20 at 8:07 pm to LSUFanHouston
Agree re 2021
From the conferences and articles I've seen/read, the "negativity affected by COVID" criterion (however that broad one is worded) is basically assumed. And it's legit w me.
And our 2020 income has dropped significantly from 2019, unless a sale of rental property we have under contract closes in 2020. So, basically if it doesn't close this year, then I'm gonna take the CARES distribution.
This is my own company's SEP IRA, and TD Ameritrade (which is listed as admin) told me they have no vetting process. They said they'd just note on the withdrawal that I took it under CARES.
My wife was on partially paid leave and went to 2/3 time w pay cut when she went back (today), and we max out all of her retirement contributions and pre-tax benefits, so our AGI is gonna be VERY low. I'm trying to keep as much of the proceeds on the sale in the 0% bracket, and in 2021 it's looking like I'm going to be harvesting a lot of delayed-income stuff from 2020. So, I'm not sure it's going to make sense to take early distribution in either year even if penalty-waiver is extended.
Anyway, TMI. We need a simpler tax code and an easier version of 1031 exchange (no way am I trying that shite in our situation).
quote:
you do have to qualify. It's not automatic
From the conferences and articles I've seen/read, the "negativity affected by COVID" criterion (however that broad one is worded) is basically assumed. And it's legit w me.
And our 2020 income has dropped significantly from 2019, unless a sale of rental property we have under contract closes in 2020. So, basically if it doesn't close this year, then I'm gonna take the CARES distribution.
This is my own company's SEP IRA, and TD Ameritrade (which is listed as admin) told me they have no vetting process. They said they'd just note on the withdrawal that I took it under CARES.
My wife was on partially paid leave and went to 2/3 time w pay cut when she went back (today), and we max out all of her retirement contributions and pre-tax benefits, so our AGI is gonna be VERY low. I'm trying to keep as much of the proceeds on the sale in the 0% bracket, and in 2021 it's looking like I'm going to be harvesting a lot of delayed-income stuff from 2020. So, I'm not sure it's going to make sense to take early distribution in either year even if penalty-waiver is extended.
Anyway, TMI. We need a simpler tax code and an easier version of 1031 exchange (no way am I trying that shite in our situation).
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