We have been approached by many of our divorce and custody clients seeking alternative options to financially support themselves during these unprecedented times and still be able to maintain their case. Many of our current clients were unaware of options they may currently have to help themselves and their families.
The Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law by President Trump on or about March 27, 2020. For those who are eligible, the CARES Act eliminates the 10% early-withdrawal hit and the 20% federal tax withholding for certain retirement plans (examples may include 401(k)s, 403(b)s, 457s, and Traditional IRAs). Since the original contributions to your 401(k) were pre-tax, you will still owe taxes on the amount you withdraw, but the taxes owed can be spread over three (3) years instead of the usual one (1) year.
You Can Borrow Money From Yourself
The CARES Act also allows borrowing of up to $100,000.00 of your vested balances from your retirement accounts. You can then pay yourself back in installments within five (5) years, commencing 2021. You will still owe interest on the loan.
We encourage you to speak to your financial advisor and accountant for further details to determine your best options. If you have questions on how withdrawals or borrowing funds from your retirement accounts may affect your divorce proceedings, please call our office at (702) 901-4800 or email us at firstname.lastname@example.org. When everything matters, we are here.