Individuals Can Take Up to $100,000 from Their Retirement Accounts Under the Cares Act.
Question: I’m not sure if we qualify as COVID-affected. Early this year, we purchased a home, using most of our after-tax savings for the transaction. Our “old” home is under contract, but the buyer seems to be getting cold feet because of the COVID-19 scare. If the buyers cancel, might I be able to withdraw up to $100,000 to live on till our house sells, then repay it within three years to avoid paying taxes on it? I’m 65 and retired.
Answer: According to Denise Appleby, CEO of Appleby Retirement Consulting, you may take coronavirus-related distributions of up to an aggregate amount of $100,000 at any time after Jan. 1, 2020 and before Dec. 31, 2020, from eligible retirement savings accounts.
You are eligible to take coronavirus-related distributions if you fall into at least one of the following categories:
- You were diagnosed with the virus SARS–CoV–2 or with coronavirus disease 2019 (COVID–19) by a test approved by the Centers for Disease Control and Prevention,
- Your spouse or dependent was diagnosed with such virus or disease by such a test, or
- You experienced adverse financial consequences as a result of being quarantined, being furloughed or laid off or having work hours reduced due to such virus or disease, being unable to work due to lack of child care due to such virus or disease, closing or reducing hours of a business owned or operated by the individual due to such virus or disease, or other factors as determined by the IRS.
For his part, Timothy Kenney, CFP, founder of TK Pacific Wealth, Inc., recommends double-checking with a CPA but believes that as long as they’re able to explain that their hardship was related to COVID-19 then that would qualify.
One thing to note: Individuals can take up to $100,000, recognize the income over three tax years, and can recontribute some or all of the $100,000 within three years.
Got questions about Social Security, Medicare, retirement, investments, or money in general? Get answers. Email Robert.Powell@maven.io. Kim McSheridan assisted with this report.