Cares act 401k Distribution? Anyone?

[KarefulKactus15]

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?

[terran]

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).

[KarefulKactus15]

Hmm I didn't consider this a tax topic but I suppose it is.

[RWD]

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.

[ixtap]

You mean, just remove tax sheltered monies from their shelter to put them in a taxable account? What is the upside?

[KarefulKactus15]

All good points. I imagine the only logical answer would be for someone who is about to fire and wants a little extra cash.

[DK]

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.

[MDM]

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.

[KarefulKactus15]

From what little I read, the taxes are split over 3 years.