# Reminder! Special 401k rules for 2020 coming to a close.



## Seamus (Jun 21, 2018)

I'm not saying it's a good idea to withdraw money from your 401k early, but if you are going thru a financial hardship and need to do so, make sure you do it before 12/31/20. Many don't realize it but as part of the cares act for 2020 only, there is no penalty on early withdrawal. (if you say the withdrawal is a covid related). Unless some action is taken to renew this it expires 12/31. It would be a shame for someone to do this after January 1st and pay an extra 10% in penalties.


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## Trafficat (Dec 19, 2016)

Thankfully I have no funds tied up in a 401K so I do not have to worry about this!


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## UberTaxPro (Oct 3, 2014)

Seamus said:


> I'm not saying it's a good idea to withdraw money from your 401k early, but if you are going thru a financial hardship and need to do so, make sure you do it before 12/31/20. Many don't realize it but as part of the cares act for 2020 only, there is no penalty on early withdrawal. (if you say the withdrawal is a covid related). Unless some action is taken to renew this it expires 12/31. It would be a shame for someone to do this after January 1st and pay an extra 10% in penalties.


Just don't forget that you have to pay the money back within a 3 yr window of time otherwise you'll pay income tax on the amount withdrawn.


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## Seamus (Jun 21, 2018)

UberTaxPro said:


> Just don't forget that you have to pay the money back within a 3 yr window of time otherwise you'll pay income tax on the amount withdrawn.


Good point. The other item I didn't include which is very important for people to know is that the income can be spread out over 3 years for tax purposes.


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