CARES act retirement withdrawal penalty waiver

[schirallicpa]

Did this expire at the end of 2022?

[Lee B]

Not sure which aspect you're referring to however:

"Although the initial provision for penalty-free 401(k) withdrawals expired at the end of 2020, the Consolidated Appropriations Act, 2021 provided a similar withdrawal exemption, allowing eligible individuals to take a qualified disaster distribution of up to $100,000 without being subject to the 10% penalty that would normally apply. This extended the timeline for penalty-free distributions through June 25, 2021.

[TexTaxToo]

COVID related distributions had to be taken in 2020.  The CAA21 provision was for other disasters occurring between 1/1/2020 and 1/26/2021.

The SECURE 2.0 act (part of CAA22) made permanent a waiver for disasters occurring after 1/26/2021, but only for up to $22,000 in distributions taken within 180 after the disaster.

Both of the latter are only for those who lived in a Presidentially declared disaster area and sustained an economic loss due to the disaster.

[schirallicpa]

I have a client that thought he was getting a big ERC credit and that did not work for him - because his business grew during the pandemic.  So he is now looking for money in his wife's retirement account and thinks there must be a way to avoid tax and penalties.  

 

[TexTaxToo]

SECURE 2.0 did add other exceptions to the penalty.  One if you are terminally ill (hope this doesn't apply).  Other additions to definition of Public Safety Employee.

[Lee B]

Secure 2.0 added a lengthy list of exceptions to the penalty which you should review