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The Money Mustache Community
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Cares act 401k Distribution? Anyone?
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Topic: Cares act 401k Distribution? Anyone? (Read 1012 times)
KarefulKactus15
Handlebar Stache
Posts: 1283
Location: Southeast
Cares act 401k Distribution? Anyone?
«
on:
June 16, 2020, 07:22:36 PM »
Hello,
I realize this is the investing sub and not the de-vesting (is that a word?) sub. Is anyone taking or pondering taking a distribution from 401k under the exceptions list that waves the early withdrawal penalty?
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terran
Magnum Stache
Posts: 3807
Re: Cares act 401k Distribution? Anyone?
«
Reply #1 on:
June 16, 2020, 08:48:04 PM »
If you're retiring and meet the requirements it could be a good way to get started, but definitely doesn't seem like a good idea for anyone still in the accumulation phase (unless it's the only way to afford to live, of course).
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KarefulKactus15
Handlebar Stache
Posts: 1283
Location: Southeast
Re: Cares act 401k Distribution? Anyone?
«
Reply #2 on:
June 17, 2020, 10:27:46 AM »
Hmm I didn't consider this a tax topic but I suppose it is.
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RWD
Walrus Stache
Posts: 6616
Location: Arizona
Re: Cares act 401k Distribution? Anyone?
«
Reply #3 on:
June 17, 2020, 10:39:52 AM »
In general for tax purposes you want to keep your income as flat as possible over your lifetime. Although the penalties may be waived taking a distribution will increase your income if you are still working and hence increase your taxes.
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ixtap
Magnum Stache
Posts: 4583
Age: 51
Location: SoCal
Re: Cares act 401k Distribution? Anyone?
«
Reply #4 on:
June 17, 2020, 10:50:21 AM »
You mean, just remove tax sheltered monies from their shelter to put them in a taxable account? What is the upside?
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KarefulKactus15
Handlebar Stache
Posts: 1283
Location: Southeast
Re: Cares act 401k Distribution? Anyone?
«
Reply #5 on:
June 18, 2020, 06:32:15 AM »
All good points. I imagine the only logical answer would be for someone who is about to fire and wants a little extra cash.
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DK
Stubble
Posts: 237
Re: Cares act 401k Distribution? Anyone?
«
Reply #6 on:
July 12, 2020, 09:19:21 PM »
i think it would be a good way to get the 5 years spending if you are about to start a roth ira pipeline. i've been thinking about this myself but trying to think through the tax rates, etc.
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MDM
Senior Mustachian
Posts: 11499
Re: Cares act 401k Distribution? Anyone?
«
Reply #7 on:
July 12, 2020, 11:47:50 PM »
People with a high fee 401k might want to remove $100K from it and re-contribute the $100K to traditional IRA funds of their choice.
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KarefulKactus15
Handlebar Stache
Posts: 1283
Location: Southeast
Re: Cares act 401k Distribution? Anyone?
«
Reply #8 on:
July 13, 2020, 11:13:58 AM »
From what little I read, the taxes are split over 3 years.
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Cares act 401k Distribution? Anyone?