IRS expands eligibility to take up to a $100,000 coronavirus-related withdrawal from IRA, 401(k)

IRS expands eligibility to take up to a $100,000 coronavirus-related withdrawal from IRA, 401(k)  ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌  ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌  ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌  ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌  ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌  ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌  VIEW IN BROWSER | SUBSCRIBE WED, JUN 24, 2020 YOUR WEALTH Editor's Note Financial advisors, overall, say borrowing from a qualified retirement account should be a last resort. In fact, while chatting with an advisor a few years back, I asked what his feeling was about individuals borrowing from their 401(k) plan. Without hesitation he said: "It's not a loan; it's a withdrawal, and it's a really bad idea." He said you need to exhaust every other option available before touching the money you are saving for retirement. He concluded: "If you still have a car, a television or jewelry, you haven't exhausted all your options." That may seem extreme, and perhaps it is. Some advisors feel you can tap into that 401(k) early if you have what they deem an "immediate and heavy financial need." Well, the pandemic has certainly created a serious financial burden on millions of Americans and their families. Over the past four months, millions of American workers have experienced sudden and unexpected losses of their primary sources of income. They need access to cash. Tapping a 401(k) plan or individual retirement account is basically the best option for many of these people. Congress has offered some assistance by passing legislation through the CARES Act to make it easier to access money from those retirement accounts. The new law creates a penalty-free early distribution rule, using similar "adverse financial consequences" guidelines: If you have a 401(k) or IRA and are under age 59½, you can take a penalty-free retirement account distribution of up to $100,000. But be aware, borrowing from your 401(k) is considered a loan. Under the CARES Act, you will have up to six years to pay yourself back. Of course, loans do have an associated interest rate, currently between 5.25% and 6.25%. To be sure, it's complicated and requires some serious financial planning. That's why I suggest talking to a financial professional for advice. Reach out to a financial advisor or accountant and discuss your options and make sure this financial decision is right for you and for your family. For more key stuff like this, please follow me on Twitter @jimpavia and check out CNBC's Financial Advisor Hub and CNBC + Acorns Invest in You: Ready. Set. Grow. Jim Pavia @JIMPAVIA IRS expands eligibility to take up to a $100,000 coronavirus-related withdrawal from IRA, 401(k) The IRS released guidance on Friday, broadening the number of people who can take "coronavirus-related distributions" from their 401(k) plans and individual retirement accounts. Op-Ed: The CARES Act makes it easier to tap your 401(k). Here's exactly what you need to know before you do The CARES Act has made it easier for workers suffering due to the Covid-19 pandemic to tap their 401(k) plans and IRAs. Here's what to know before making a withdrawal from your retirement savings account. IRS eases rules on reversing required retirement savings withdrawals The IRS said Tuesday that required minimum withdrawals that already have been taken this year can be reversed. Trump says he's open to more stimulus checks. What to know before you count on the money As Congress gets ready to consider another stimulus package, President Donald Trump said this week that stimulus checks could be a part of the mix. But Americans would first have to wait for political negotiations and another deployment of payments. Here's why you haven't received your tax refund Tax refunds can be a significant source of emergency cash, especially at a time when households' finances are pinched. A few unfortunate taxpayers have been waiting since this spring to get their money back. If you inherited a retirement account, you need to think twice before you tap it this year The CARES Act gave owners of 401(k) plans and IRAs a little more flexibility if they're cash-strapped. However, the rules aren't quite as kind to inherited IRA owners, according to the American Institute of CPAs. Technology, medical and pharmaceutical has caught the attention of these high-net worth investors High-net worth investors in the investment group TIGER 21 have been waiting for a crisis and it finally came. These individuals have been stockpiling cash for the last year and they continue to do so. Here are some red flags that could grab the attention of IRS The IRS may be auditing fewer returns than it once did, yet there is still a risk of hearing from the taxman for variety of reasons. A tale of two recessions: Some Americans thrive as others suffer The recession is playing out much differently across wealth, race and gender divides. Some are bearing the brunt of the economic contagion, while others hardly feel a thing. Here's how much you'll really need to buy your first home (Hint: It's more than you think) You may be saving up for a down payment, but that's not the only cash you'll have to come up with before you get the keys to your new place. Something to hate for everyone "One of the interesting things about the situation we're in is that there's something to hate in here for everyone ..." CONTRIBUTORS Sharon Epperson @sharon_epperson Josh Brown @ReformedBroker Unsubscribe Manage Newsletters Terms of Service Join the CNBC Panel   Digital Products Feedback Privacy Policy CNBC Events   © 2020 CNBC LLC. All rights reserved. A property of NBCUniversal. 900 Sylvan Avenue, Englewood Cliffs, NJ 07632 Data is a real-time snapshot *Data is delayed at least 15 minutes. 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