Covid 19 and cashing out retirement funds in 2022

Forum|Forum|3 years ago
March 10, 2023
1 reply
19 views

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.

Covid Cashout in 2022

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qbteachmt

Level 15

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:

https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-hardship-distributions

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kitnTXAuthor

Level 3

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

"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

Don't yell at us; we're volunteers

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