For savers - section 2202
Individuals affected by the coronavirus will be permitted to take a withdrawal from their retirement accounts (IRAs, 401(k)s, etc.) of up to $100,000, without paying the usual early-withdrawal penalty. In addition, the sum withdrawn may be recontributed to a retirement account within three years, without being subject to the usual annual contribution caps. If it’s not repaid, the withdrawal will be taxed at ordinary income tax rates over a three-year period. Notably, the definition of eligibility for penalty free early withdrawals is rather expansive, encompassing anyone experiencing any economic effects due to the virus.
In addition, the limit on loans from retirement plans is increased from its existing $50,000 to $100,000 and the existing limitation that loans may not exceed half the vested account balance has been removed. Due dates for new loans or loans already outstanding are also to be extended by one year.
For retirees - section 2203
The legislation waives the required minimum distributions for IRAs and other individual retirement accounts for calendar year 2020.
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