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Eased retirement plan distribution options available for 2020

 

  • The CARES Act allows you to take up to a $100,000 COVID-19-related distribut ion from your retirement plan that is eligible for a 3-year rollover period. Income taxes will apply but early distribution penalties will not apply.
  • You can pay the taxes on the distribution all at once or over 3 years beginning in 2020.
    • New Form 8915-A will be used to spread the tax over 3 years.

     

  • You may re-contribute retirement distributions received and they will be treated as qualified rollovers.
    • You must re-contribute the funds within 3 years.
    • Re-contributions will be treated as rollovers.
    • Taxes paid on distributions that are later re-contributed within the 3-year period can be recovered by filing an amended return (Form 1040-X).

     

  • If you are under 59 1/2 and took a COVID-19-related early distribution from your retirement account in 2020, the 10% early-withdrawal penalty is waived.
  • See this link for more information: https://www.irs.gov/newsroom/coronavirus-related-relief-for-retirement-plans-and-iras-questions-and-answers

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