As the pandemic continues, many will experience economic hardship due to medical bills or due to a lost job. The CARES Act of 2020 provides some relief by allowing individuals to draw up to $10,000 from their retirement with minimized tax consequences.
In order to qualify, you must meet one of the following criteria:
- Be diagnosed with COVID-19, or have one of your family members diagnosed
- Be furloughed, laid off, have your business close or have reduced hours due to COVID-19
- Be unable to work due to lack of child card due to COVID-19
If you meet these criteria, you can withdraw up to $10,000 of income from an eligible retirement plan, to a limit of $100,000 from all plans and IRAs. Even better, this withdrawal will not be subject to the early 10% penalty, and the income can be spread out over the next three tax year.
For more detailed information about taking distributions from your retirement, visit IRS at https://www.irs.gov/newsroom/coronavirus-related-relief-for-retirement-plans-and-iras-questions-and-answers
When you have tax-related questions, our support staff is ready to find the right answers quickly with our standard support service, Pro Advisor I Tax Support. Select the link below to schedule an appointment or feel free to contact us. The meeting scheduler will display an up-to-date calendar and let you pick a convenient time. We will contact you at the scheduled time with the phone number provided.
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Clergy Financial Resources serves as a resource for clients to help analyze the complexity of clergy tax law, church payroll & HR issues. Our professionals are committed to helping clients stay informed about tax news, developments and trends in various specialty areas.
This article is intended to provide readers with guidance in tax matters. The article does not constitute, and should not be treated as professional advice regarding the use of any particular tax technique. Every effort has been made to assure the accuracy of the information. Clergy Financial Resources and the author do not assume responsibility for any individual’s reliance upon the information provided in the article. Readers should independently verify all information before applying it to a particular fact situation, and should independently determine the impact of any particular tax planning technique. If you are seeking legal advice, you are encouraged to consult an attorney.
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