Covid Distribution
Is there a penalty for an early distribution from a 401(k) for someone that lost there job due to the pandemic. Did this rule penalty waiver extend to 2021?
She has an old 401(k) and needs to make an early distribution (before 59.5). Is there any added benefits to rolling it to an IRA and then making the distribution?
Thank you!
Permalink Submitted by Alan - IRA critic on Mon, 2021-02-22 23:17
The deadline for penalty free Covid related distributions (CRDs) was 12/30/2020. If the persons lost their job in or after the year they reached 55, distributions from the sponsoring plan of that employer continue to be penalty free when withdrawn from that plan. IRA accounts offer some different penalty waivers, including substantially equal periodic distributions. The list of penalty exemptions per plan is below.
Retirement Topics Tax on Early Distributions | Internal Revenue Service (irs.gov)