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Covid 19 and cashing out retirement funds in 2022
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kitnTX
Level 2
03-10-2023
12:30 PM
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Client could not take out his retirement in 2020 because he was not vested. He had back rent to pay. He took out in 2022 when he became vested. I could not locate any extenuating circumstances in the IRC. Any suggestions? It was ONLY $30K and he took out Federal (not State) taxes.
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qbteachmt
Level 15
03-10-2023
02:14 PM
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You used the word "retirement" and not Account/Plan Type. Not being vested, means not a 401(k), not a 403(b), not a SIMPLE IRA, not an SEP IRA? In other words, what is this? That's important.
Covid doesn't apply to 2022.
"Only $30k" you have to read if some disaster applies:
https://www.irs.gov/newsroom/tax-relief-in-disaster-situations
Or a hardship condition that qualifies:
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"Level Up" is a gaming function, not a real life function.
"Level Up" is a gaming function, not a real life function.
kitnTX
Level 2
03-10-2023
02:51 PM
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Sorry. It was an SEP IRA. I read the disasters and nothing was allowed in 2022 for COVID disaster, yet this man couldn't touch his SEP IRA until 2022 to pay back rent DUE in 2020.
qbteachmt
Level 15
03-10-2023
02:55 PM
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"I read the disasters and nothing was allowed in 2022 for COVID disaster"
Yes, I mentioned this.
"yet this man couldn't touch his SEP IRA until 2022 to pay back rent DUE in 2020."
Because of the two-year requirement? That isn't really a "vesting" requirement. Here are the SIMPLE IRA provisions:
https://www.irs.gov/retirement-plans/simple-ira-withdrawal-and-transfer-rules
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"Level Up" is a gaming function, not a real life function.
"Level Up" is a gaming function, not a real life function.
Terry53029
Level 14
08-17-2023
08:30 AM
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A sep is a little different than a traditional IRA. link for SEP. https://www.irs.gov/retirement-plans/plan-sponsor/simplified-employee-pension-plan-sep
Who owns SEP contributions?
Contributions to SEP accounts are always 100 percent vested, or owned, by the employee.
What are the basic withdrawal rules?
SEP contributions and earnings are held in SEP-IRAs and can be withdrawn at any time, subject to the general limitations imposed on traditional IRAs. A withdrawal is taxable in the year received. If a participant makes a withdrawal before age 59½, generally a 10% additional tax applies. SEP contributions and earnings may be rolled over tax-free to other IRAs and retirement plans.
