CARES Act 401K to Self Directed IRA Hack

[Steve Shaffer]

Hello all! I am a multifamily investor in Fargo, ND and was looking at some of the CARES act provisions regarding the 401k withdrawal (not loan). I was reviewing the docs from my custodian and that led me to the actual IRS docs. I was planning to withdrawal $100,000 and elect to not have federal taxes withheld as my intent was to pay it back within the three years allowed. Digging deeper, this would require paying the taxes over the first two years and filing an amended return in year three. I would prefer to avoid the amended return step if possible and that is where this new wrinkle comes in. The payback can be into ANY qualified account and is classified as a trustee to trustee transfer. My question is, this seems to mean that I can take a 100K withdrawal from my 401K at work and roll it into a self directed IRA penalty free. Is this true? Any downsides? Thanks so much for your expertise!