While the nontaxable payments of $1,200 to qualified Americans and the Paycheck Protection Program of the CARES Act have gotten a lot of attention, there are also provisions within the CARES Act to allow 401k participants to access money from their retirement accounts without being penalized.
In order to qualify, you must self-certify that one of the following applies:
If one of these conditions applies, you may be eligible for a Plan Loan or a Coronavirus Related Distribution (CRD).
Per the CARES Act, you may be eligible to borrow up to $100,000 vested from your retirement account. If you currently have an outstanding loan from your plan with a repayment date between March 27, 2020 and December 31, 2020, you may also be able to delay your loan repayment(s) for up to one year.
The second 401k relief option under the CARES Act allows you to request a Coronavirus Related Distribution (CRD) from your retirement account without a 10% early withdrawal penalty. While these distributions will be included in your income and subject to income tax, that taxation may be spread over a three year period. You can then repay the entire distribution back to the plan on the same three year schedule and recoup any taxes paid.
While these options are available, investors warn that they should be used as a last resort and only if you have an immediate need. Drawing from the distributions in your retirement plan may affect your long-term savings and alter your ability to reach your financial goals. Talk with your financial advisor or tax professional regarding your specific situation.
If you've been affected by the Coronavirus and need immediate cash, you may be able to access your 401k funds.
Source: 401k Advisors Intermountain