Has anyone made a withdrawal like this? Received word kids won’t be returning To school full time this year. I can’t work full time with 3 kids home/ Covid worries. It seems if you pay back within 3 years, their won’t be tax liability. Any insight ? Hope everyone is staying healthy and well !
So sorry it has come to this for you and your family. Can you possibly switch schools?
Are you considering quitting your job? That's a very risky move. How old are the kids? Is there someone else who could help you?
I lost my job, we could hire help but I’m nervous about Covid and sont want to police another person :(z and this is really to hedge against any bigger problems. We plan to pay back within 2 years.
Ido some research online first or talk to someone at your 401K administrator. IRS seems to allow hardship withdrawals without tax for people 59.5 and older for things like medical expenses, college tuition or buying a home. So not everyone, or everything, qualifies. The response above talks about withdrawing to "hedge" against bigger problems, but it doesn't seem like that is really a thing that one can do without penalties etc.
The hardship withdrawal is part of the covid CARES act. Anyone can withdraw up to 100k from their retirement account without penalty for financial hardship due to covid. If you owe capital gains you can spread the tax out over 3 years. Also you have the ability to pay it back without incurring taxes. It expires 12/31. I hope the will renew past the end of the year. Haven't used it, but considering.
Here's the IRS's guidance on who is a "qualified" individual for purposes of covid-related withdrawals:
You are a qualified individual if –
You are 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 is diagnosed with SARS-CoV-2 or with COVID-19 by a test approved by the Centers for Disease Control and Prevention;
You experience adverse financial consequences as a result of being quarantined, being furloughed or laid off, or having work hours reduced due to SARS-CoV-2 or COVID-19;
You experience adverse financial consequences as a result of being unable to work due to lack of child care due to SARS-CoV-2 or COVID-19; or
You experience adverse financial consequences as a result of closing or reducing hours of a business that you own or operate due to SARS-CoV-2 or COVID-19.