Stimulus bill just passed allows $100k IRA withdrawal tax free?

Submitted by Brad Atherton on Mon, 2020-12-28 17:14

On Dec. 24 CBS moneywatch reported:

“The $900 billion stimulus bill that Congress passed Monday allows workers to take money from their 401(k)s without being hit with a tax penalty.”

“Anyone can take up to $100,000 from their account — through a loan or withdrawal — as long as they live in an area where a major disaster has been declared, according to the bill. Under the CARES Act, the provision came with eligibility requirements that are no longer necessary because President Trump has designated all 50 states as major disaster areas due to the coronavirus pandemic.”

Is this true and if so does it have to be done in 2020?

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Permalink Submitted by David Mertz on Mon, 2020-12-28 18:11

No, the bill doesn’t say that. CBS apparently missed SEC. 301(1)(B) that says, “Such term shall not include any area with respect to which such a major disaster has been so declared only by reason of COVID–19.”
SEC. 301 appears to create a generalized statute for 2020 qualifed disasters so that Congress doesn’t have to create separate statutes covering each 2020 hurricane and wildfire as was done in the past.