During the pandemic, everyone is working hard at making ends meet and find jobs if they can / haven’t already. It’s no secret that many people have been laid off or furloughed since back in March and many of those people still haven’t received the stimulus amount or unemployment. That being said, people are turning to their retirement savings to keep afloat.
The CARES Act had a few revisions that cover rules about withdrawing retirement funds which temporarily increases that amount you can borrow and waives penalty fees. Normally, if you withdraw from the account early, you would be subject to a 10% withdrawal penalty along with income tax. During the time of the CARES Act, that penalty fee is waived for up to $100,000. Be aware that this temporary rule is only for those directly affected by COVD-19.
The reasons you may take advantage of this relief is:
— You, your spouse or a dependent has been diagnosed with the coronavirus
— You’ve experienced adverse financial consequences as a result of being quarantined, furloughed or laid off, or having your work hours reduced.
— You’re unable to work because of a lack of child care.
— You’ve had to close or reduce the hours of a business as a result of the virus.
— You’ve been financially affected by other factors determined by the treasury secretary.
Keep in mind, if you can avoid dipping in to your retirement fund, that is always the best choose and less to worry about. For those that are considering taking advantage of these new rules, be sure to read the fine print and all the rules before doing so.
The Kael Company Inc. would be happy to assist you and answer financial questions about the new rules which are always updating!
More information for those who may qualify under the CARES Act revisions: https://www.washingtonpost.com/business/2020/08/10/retirement-relief-cares-act-coronavirus/
