401k penalty

Forum|Forum|5 years ago
March 13, 2021
2 replies
12 views

I left my job and received money from my 401k and it was taken out as Covid relief

Do I have to pay 10% penalty since I am 58 and received this after I am no longer employed?

ColeenD3

Level 15

No.

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.