In late December, President Trump signed the Consolidated Appropriations Act, 2021 to provide disaster-related tax relief. As part of the law, there's a provision that allows impacted individuals to take a qualified disaster distribution from their retirement accounts. Similar to the withdrawal exemption in the CARES Act, eligible individuals can take up to $100,000 from their retirement accounts, without being subject to the 10 percent penalty that typically applies to early withdrawals. Those who choose to take a distribution can pay the federal taxes over a 3 year period, and have up to three years to repay the distribution amount, starting on the day they take the distribution.
- Retirement plan loans taken between December 22, 2020 and within 180 days following the enactment of this bill (June 20, 2021).
- Maximum Loan Amount = the lesser of $100,000 OR 100% of the participant’s vested account balance.
