CARES Act and Retirement Planning
Updated: Oct 19, 2020
The CARES Act was signed into law by President Trump on March 27th, 2020 to address the impact on the economy and inability of many Americans to continue working due to the Coronavirus Pandemic. Several benefits of the CARES Act for individuals include the ability to take an increased loan from certain retirement accounts. The prior rules allowed for loans up to $50,000, but under the CARES Act an individual can take a loan of up to $100,000. Additionally, if you’re younger than 59½, the 10 percent early withdrawal penalty, is waived if you take an early distribution up too $100,000 from an IRA, 401(k) or 403(b) retirement account. This waiver only applies if you have experienced financial hardship related to the pandemic and the withdrawal is less than $100,000. Please note you are still subject to income tax on the withdrawal. Furthermore, all required minimum distributions fromo retirement accounts have been suspended for 2020, including inherited IRA required minimum distributions.
To find out more, read about the benefits of the CARES Act here: https://home.treasury.gov/policy-issues/cares