Taking a CARES Act Retirement Plan Withdrawal? Prepare for This Tax Surprise

Millions of Americans have lost their jobs in the course of the COVID-19 outbreak, and even those who are working may be grappling with financial concerns. If you're finding yourself needing money but don't have much in the bank, you might assume that your next best bet is to tap your retirement savings.

Generally, taking a withdrawal from an IRA or 401(k) prior to age 59 1/2 triggers a 10% penalty on the sum you remove. But thanks to the CARES Act, which was signed into law in late March to provide COVID-19 relief, you can now remove up to $100,000 from your retirement savings if you've been impacted by the pandemic. And the interpretation of the latter is somewhat loose. You'll qualify, for example, if you're still working but have a spouse who's lost income.

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Source Fool.com