Yes. You took a distribution, regardless of how you spent the money. You can see in the other post how to handle the distribution for your best benefit.
Loans and withdrawals from workplace savings plans (such as 401(k)s or 403(b)s) are different ways to take money out of your plan.
- A loan lets you borrow money from your retirement savings and pay it back to yourself over time, with interest—the loan payments and interest go back into your account.
- A withdrawal permanently removes money from your retirement savings for your immediate use, but you'll have to pay extra taxes and possible penalties.
Those who qualify as individuals directly impacted by the pandemic will be able to withdraw up to $100k from their retirement accounts without facing the 10% early withdrawal penalty.
You qualify if:
- You, your spouse, or your dependent are diagnosed with COVID-19
- You experience adverse financial consequences as a result of being quarantined, furloughed, or laid off
- You had work hours reduced to COVID-19
- You’re unable to work due to child care closure or hour reduction
The distribution would be taxed over 2020, 2021, and 2022. You’ll have that time to pay back the funds you withdrew, without the amount impacting that year’s cap on contributions, and if you pay back the amount within that time, you’ll be able to claim a refund on those taxes.
