COVID-19 Creates New Financial Options

Mostly COVID-19 has wreaked havoc on all of us but if you are the type of person always looking for the silver lining, here are three new financial options available to you:

Required Minimum Distributions (RMDs)

In response to COVID-19, congress passed a provision under the CARES Act that suspends the requirement that people age 72 or older must take a taxable distribution from their IRA. This will allow you to both avoid the income taxes associates with the distribution and let your money continue growing tax-deferred.

401(k) Loans

In the past, if you wanted to borrow from your 401(k), you were limited to a maximum loan of $50,000 or 50% of your vested balance, whichever was less. Under the CARES Act, the loan amount increased to $100,000 or 100% of your vested balance, whichever is less.

401(k) Withdrawals

If instead of a loan from your 401(k), you choose to make a hardship distribution and you are under the age of 59½, you can do so without the imposition of the 10% federal early withdrawal penalty. You will still owe income tax on the withdrawal. This is also a provision under the CARES Act for 2020.

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COVID-19 Creates New Financial Options

  • Required Minimum Distributions (RMDs) waived for 2020
  • Borrow more from your 401(k)
  • Withdraw from your 401(k) without penalty


Stewart H. Welch, III, CFP, AEP, is the founder of THE WELCH GROUP, LLC, which specializes in providing fee-only investment management and financial advice to families throughout the United States. He is the author or co-author of six books, including  J.K. Lasser’s New Rules for Estate, Retirement and Tax Planning- 6th Edition (John Wiley & Sons, Inc.); THINK Like a Self-Made Millionaireand 100 Tips for Creating a Champagne Retirement on a Shoestring Budget. Past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by The Welch Group, LLC (“Welch”), or any non-investment related content, made reference to directly or indirectly in this article will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. More information about The Welch Group and important Disclosures can be found on our website. Consult your financial advisor before acting on comments in this article.