COVID-19 IRA withdrawal

[Nick B.]

Hello BP,

I am considering withdrawing money from my IRA pursuant to CARES Act.

According to the Act, one has to qualify to be eligible. Besides the obvious qualifiers such as being infected by the virus or losing a job due to the virus how else can one quality?

Obviously, everyone is affected in some way. E.g., my stock market investments went down in value and my apartment syndications stopped distributions. Is that enough to qualify for penalty free withdrawal from IRA under the CARES Act?

Thank you

[Greg O'Brien]

@Nick B. I agree with you.  Tax deferral is not right for everyone and a great case can be made for withdrawing and investing in cash flowing assets, like you said.  We talk to clients all the time about this and account for future taxes, fees etc to see what works best for them.  Not a one size fits all decision.  Unfortunately, taxes are only going one way and that is UP.  Taxes are on sale right now.  No doubt about that.  The former comptroller general of the US, David Walker, marches around warning people he sees taxes going up in the 50%s within 20 years because of our insolvency.  Now if you believe that or believe taxes will rise AND you will make substantially more money in the future, withdrawing now in order to re-invest in cash flowing assets seems like a nice move from the thousand foot view.  I think this is a highly individualized decision and a 401k is not right for everyone (although the gov't tries to tell you it is) just like investing in RE is not for everyone.