The newly enacted economic stimulus package allows those negatively affected by COVID-19 to borrow up to $100,000 from their 401(k) and IRAs without penalty. It also allows the borrower to pay the taxes on that withdrawal over three years rather than all at once.
- If you, your spouse or a dependent has been diagnosed with COVID-19, this "free pass" and "tax extension" applies to you.
- It can also apply to those who are facing financial hardship due to the pandemic. If you're in this group and need to make the withdrawal, then you should definitely consider this to be an option.
Just enter your 1099-R in TurboTax, go through the interview questions and at the end of the interview you will be given the option to spread out the tax over three years.
-follow these links for additional information-
Managing Your Retirement Account and Taxes ... - TurboTax
An Early Withdrawal From Your 401(k ... - TurboTax
