Coronavirus Relief for Retirement Accounts
Pennsylvania has a large population of retirees. This means there are many questions about withdrawing money from pensions, IRAs and annuities to stay afloat.
We’ve tried to answer the most common questions in this short Q & A packed with information.
Are Retirement Rules Suspended During the Pandemic?
For 2020, no one will have to take a required minimum distribution from any individual retirement account or employer retirement saving plan like a 401K.
This means you don’t need to sell investments that may have lost value. If you don’t touch the money and let it sit, it may recover.
Can I Take Money Out of My IRA or 401K Early?
You can withdraw up to $100K in 2020 without the usual 10% penalty as long as it’s because of the pandemic.
You can also pay the income taxes on it over three years from the date you made the withdrawal. You can even put the money back before the three years, even if normally, you aren’t allowed to make a contribution that large.
This is an exception for people who make coronavirus-related withdrawals. This is if you, your spouse or dependent tested positive for COVID-19 or you suffered negative consequences related to the pandemic.
Can I Still Borrow From My 401K or Other Retirement Account?
Yes. You can also withdraw double the usual amount. The bill says that if you certify that you’ve been affected by the pandemic, you’ll be able to borrow up to $100K. Under normal conditions you can’t take out more than half your balance but that rule doesn’t apply during the outbreak.
If you already have a loan that was supposed to be paid off by December of this year, you now have an extra year to take care of it.