What are the IRA contribution and withdrawal rules for 2020?
- April 6, 2021
- David Greene
- Comments Off on What are the IRA contribution and withdrawal rules for 2020?
First I want to let everyone know that the 2020 tax return filing deadline has been extended until May 17. The CARES Act changed many rules related to IRAs for 2020. First one can withdraw up to $100,000 without incurring the 10% penalty so long as he can show that the money was needed due to him or a family member contracting Coronavirus or can demonstrate that he incurred a COVID related event that caused him or his family hardship. That money is still taxable, but the taxes can spread out over three years. On the contribution side, one may contribute 2020 dollars to an IRA until May 17, 2021 (the tax filing deadline). For 2020 one can contribute $6,000 (under 50) or $7,000 (above 50). Up until 2019, the limit was $5,500. If the IRA holder does not also have a company sponsored retirement plan, he may use the entire contribution as a deduction. If he has a company retirement plan, his deduction is limited based on his income.