Pulled money from a 401(k) plan for an emergency? What it means for your taxes

But for millions of Americans who have suffered financially as a result of the coronavirus pandemic, retirement plan savings may now be their only source of cash.Under favorable terms granted as part of the federal CARES Act passed in late March, eligible individuals can withdraw up to $100,000 — known as a coronavirus-related distribution — from qualified plans, including 401 plans and individual retirement accounts.

If you have not taken a coronavirus-related distribution from your retirement plan yet, you have until the end of the year to do it.Normally, withdrawals from these accounts are subject to a 10% penalty if you pull the money before you turn age 59½.and taxes over the next three years on your tax return.

"It always depends on an individual's particular facts, but we suggest people shouldn't do this unless they have no other choice," said CPA Mark Luscombe, a principal analyst for Wolters Kluwer Tax and Accounting.Repaying funds now vs paying taxes

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