Should I withdraw money from my 401k?

Home Depot closing at 6 p.m. local time due to COVID-19


The CARES Act makes it easier for Americans struggling with economic hardship from the coronavirus pandemic to withdraw money from their retirement accounts. 

Should you take advantage of it? Experts typically advise against it, but the fallout from the crisis has left many people scrambling to pay their bills after being laid off or furloughed.

The new provisions from the CARES Act allow Americans to draw down money from tax-deferred accounts without penalties. It also relaxes rules on taking out a loan from a 401(k) savings plan.

But there are factors to consider before rushing to tap into your retirement funds. Evaluate your short-term financial needs and potential tax implications when considering whether to withdraw money from your nest egg. 

“People work hard for their retirement savings and you should dip into that as a last resort,” says Charlie Nelson, CEO of retirement and employee benefits at Voya Financial. “Americans need to think long and hard about other sources of savings first before withdrawing money from retirement funds.”

Unemployment:As coronavirus spread, economy lost 701,000 jobs in March, breaking 10-year string of gains

Coronavirus:How quickly can the economy bounce back?

Piggy bank with a combination lock and nest eggs that say IRA and 401K sitting on top of 20 dollar bills.

Should I withdraw money from my 401(k)?

Marc Walstedter of Danbury, Connecticut found out last month that he had been let go from his job. The 47-year-old was a sales director at Auction Simplified, a firm that provides software programs for auto dealers. The company came under financial pressure after auto dealerships shuttered due to the virus outbreak. 

Now he’s worried about how he’s going to make his monthly $2,300 mortgage payment.


Source link

By Javier Manning

Javier has been in the field of content writing for almost 8 Years as he hails from the Biotechnology background. The edifying articles portray her craving towards language. His keen hobby of reading technological innovations related books or articles has sown the seed of being a well-versed editor with the current scenario of numerous industry verticals. He is one of the valuable assets to this publication. The Industry News Press has awarded him with a senior editors post based on his skillful performance to date.