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Calif. OKs Relief For Retirement Plan Loans In Fed. Virus Bill

By Abraham Gross · September 15, 2020, 3:29 PM EDT

California enacted legislation to conform portions of the state tax code to the federal COVID-19 relief bill in order to spare individuals from penalties when they take loans from qualified employer retirement accounts.

A.B. 276, signed into law Friday by Democratic Gov. Gavin Newsom, conforms California law to the Coronavirus Aid, Relief and Economic Security Act by suspending automatic penalties for loans from qualified retirement plans.

The federal law expands the allowable penalty-free withdrawal or loan amount that an individual can take from qualified retirement accounts from $50,000 to $100,000, but state law only conformed to the federal relief with respect to withdrawals, according to a bill analysis.

The bill is intended to minimize inadvertent penalties for individuals taking loans of greater than $50,000 on the basis of federal relief, according to the analysis.

--Editing by Neil Cohen.

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