401 K withdrawal, any CPAs in the house?
I'm interested in withdrawing funds from my 401k. I'm hoping to identify if I qualify for CARES act. Situation: my spouse is an educator and was relieved of duties at covid onset. She does however continue to receive her pay from her employer.
IRS data for qualification:
Being quarantined, furloughed or laid off.
Having their hours at work cut.
Having a job offer rescinded or delayed or their income (including self-employment income) reduced.
Being unable to work because of a lack of child care.
Slashing operating hours or shutting down a business due to the outbreak.
Given the situation, do we qualify?
- EvaLv 74 weeks ago
Because she is still being paid, you do not qualify based on the reasons you list.
- Anonymous4 weeks ago
Nope, she's still getting paid for not doing a job.
- Wayne ZLv 74 weeks ago
Based on conversations that I have had with other tax professionals and the reading of the law, no.
"You experienced adverse financial consequences as a result of certain COVID-19-related conditions, such as a delayed start date for a job, rescinded job offer, quarantine, lay off, furlough, reduction in pay or hours or self-employment income, the closing or reduction of your business, an inability to work due to lack of childcare, or other factors identified by the Department of Treasury."
For "you" to withdraw your 401k without penalty, "you" would have be laid off, terminated, furloughed, etc.
The part of the law related to having COVID states "You, your spouse or your dependent". However, the part related to financial difficulties only says "you" and does not mention "your spouse".
- Russ in NOVALv 74 weeks ago
Have you considered taking a loan from your 401K instead? It gives you an opportunity to replace it (and maintain the tax advantage) and pay yourself the interest while you are doing it. I guarantee that you will miss it when you comes to retirement if you remove it now and don't eventually replace it.