COVID-19 Rules for Penalty-free Withdrawal from Retirement Accounts Like 401(k)s

Doug Andrew is fresh back from the annual Grandpa’s Camp that he holds with his 17 grandchildren and has a timely and essential message for his listeners. This year’s Grandpa’s Camp focused on lessons in being responsible and accountable to yourself, your family, your fellow man, your country and your God. It’s a message that also carries over to Doug’s work at 3 Dimensional Wealth.

The earlier in life we learn these types of lessons, the greater the advantage as we move forward. This can apply in other areas of our lives as well.

If you currently have money accumulating in an IRA, a 401(k), a 403(b) or similar qualified plan, Doug has an important message regarding the penalties that can be incurred if you try to access your funds before age 59 1/2. There are also penalties for not accessing that money annually after age 72. Leaving that money in a tax-deferred vehicle means you’ll pay through the nose eventually. Better to get the taxes over and done with and be done with before tax rates can go higher.

CHECK OUT JUST A FEW OF THE HIGHLIGHTS DOUG COVERS IN THIS WEEK’S EPISODE:

  • How will the massive stimulus spending in response to COVID-19 affect your future taxes? Learn why Congress may have no choice but to seriously hike taxes to covered its unprecedented spending.
  • Is there any advantage in postponing taxes in an IRA or 401(k) until the account value is even bigger? Remember, the likelihood of tax rates going down is virtually nil, at this point.
  • Why would it make sense to get your money out of these tax-deferred accounts and get those taxes over and done with forever? Doug explains how it can be done sooner than later and why now may be the best time of all.
  • How has the IRS softened its requirements and penalties on those who need to access their retirement funds due to hardship related to the coronavirus pandemic? Doug spells out what those changes are and which ones you should be taking advantage of.
  • If you qualify to access those funds under the hardship rules, should you take the minimum or maximum amount out of your IRA or 401(k)? Doug says jump on the opportunity to get that money out and those taxes paid while they’re the lowest they’re likely to be for some time.
  • Assuming you have money left over, where should you put that money once you’ve taken it out of your tax-deferred account? Doug describes his preferred tax-free accumulation vehicle that allows for liquid assets safely earning predictable rates of return.
  • And much, much moreā€¦

Start by visiting with a IUL Specialist today.

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*Life insurance policies are not investments and, accordingly, should not be purchased as an investment.

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