What Is a Qualified Birth or Adoption Distribution?
A qualified birth or adoption distribution (QBOAD) is a penalty-free withdrawal from an eligible retirement plan within one year of the birth or adoption of a child. The SECURE Act, enacted in 2019, added this provision to the law.
QBOADs may be taken from 401(k) plans, 403(b) plans, and other qualified retirement plans.
How Much Can Be Withdrawn?
For QBOAD, each parent can take up to $5,000 for each child. This means that a couple can take up to $10,000. The amount is not subject to the 10% additional income tax for early withdrawals. However, the withdrawal may be subject to ordinary federal and state taxes.
Individuals are not required to pay back the balance of the withdrawal but may be allowed to do so if they remain eligible to make contributions to the plan.
How Can I Make a Qualified Birth or Adoption Distribution in the J.P. Morgan Portal?
- To make a qualified birth or adoption distribution, start by logging in to your J.P. Morgan portal.
- Click on the Withdrawals & Rollovers button on the home page.
- Select Withdraw from Balance.
- Under the “Reason for this withdrawal” dropdown, select “My spouse or I have given birth to or adopted a child in the past year.”
- Underneath “Partial Pre-Tax Amount as Cash,” type in the amount that you wish to withdraw. Note: This cannot exceed the lesser of $5,000 or your vested account balance.
- Select your delivery method.
- Once you have read the notice, click the checkmark next to “I have read and understand Important Information About Retirement Withdrawals.”
- When you are finished, please select Submit Withdrawal Request.
Note: QBOADs have a $100 processing fee, and depending on your delivery method, you may be charged an additional fee.