# Just a reminder if you have a 401k or retirement IRA and are taking required distributions



## poppy (Feb 21, 2008)

As you know, in the year you turn 70 and 1/2 you are required to start taking a certain amount out of your retirement account each year and pay income tax on that withdrawal. Pres. Trump cancelled that requirement this year due to COVID. You only have until August 31 to redeposit that amount back into your IRA if have already taken this year's deduction and don't need the money right now. Might save some of you a few hundred dollars in taxes when you file next year.


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## Cabin Fever (May 10, 2002)

Does this apply to anyone of any age? In other words, could my wife (age 62) take money out of her 401K account and have it placed into our bank account without paying income tax on it?


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## poppy (Feb 21, 2008)

No. It only applies to those 70 and 1/2 or older taking yearly mandatory withdrawals. Government requires those withdrawals in order to recoup some of the taxes you avoided by putting money into a 401K.


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## thesedays (Feb 25, 2011)

I thought that money could be withdrawn without penalty at age 59 1/2.


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## poppy (Feb 21, 2008)

thesedays said:


> I thought that money could be withdrawn without penalty at age 59 1/2.



That is true but does not apply to income taxes. There is a separate penalty for withdrawing before 59 and 1/2 plus income taxes. You are allowed to borrow a percentage of it from yourself for certain reasons before 59 and 1/2 but if you miss a payment, the whole balance is declared a distribution and you must pay the penalty plus income taxes. Those 2 can take a chunk of your savings.


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## mzgarden (Mar 16, 2012)

Doesn't apply to me, but I'm always thankful for people here that bring good education into the light.


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## Jenn (Nov 9, 2004)

CabinFever Trump did not cancel the taxes due on 401K withdrawals, just there is not, for 2020, the mandatory required minimum distribution (RMD) from IRAs and 401K type accounts for those over 70 &1/2. And a fine on top of the taxes due if that RMD is not made in usual years. So doesn't apply to your wife for another few years. And when she gets there age is now 72 and up IIRC. Also we fussed a lot about this for MIL, but her bank was doing it already automatically (maybe due to FIL setting it up properly before he died, but likely just for all once age reached to avoid the huge penalties), transferring the right amounts from IRAs to checking account each December. The 401K organization should be able to guide you when you hit that age if you don't use an accountant etc.


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