The Window for Penalty-Free 401(k) Withdrawals Closes Soon
In 2020, the holiday season brings an extra year-end deadline to keep in mind: Dec. 31 is the last day to make penalty-free withdrawals from your 401(k) under the CARES Act.
With the passage of the CARES Act in March, Americans affected by the pandemic were allowed to withdraw up to $100,000 from their retirement accounts without the 10% early-withdrawal penalty people under the age of 59½ usually face. Nearly eight months later, it’s still a tempting offer as millions of people are unemployed, and many are struggling to pay rent and utility bills. While you can still make a withdrawal by the end of the year, experts say that you should absolutely consider other sources of cash first.
“The retirement plans should be a place of last resort,” says Chad Parks, founder and CEO of Ubiquity Retirement + Savings, which is based in San Francisco. Dipping into retirement savings now could push back your retirement later, he adds.
One of the biggest benefits of investment accounts like a 401(k) is that, thanks to compound interest, your money will grow over time. So while a $10,000 withdrawal may not seem like a big deal, that $10,000 with an annual 6% return could have been nearly $57,500 in 30 years, according to Vanguard.
“If you take it out today, you’re robbing yourself of that future growth,” Parks says.
https://www.msn.com/en-us/money/retirement/the-window-for-penalty-free-401-k-withdrawals-closes-soon/ar-BB1b4f0V?li=BBnbfcN&ocid=DELLDHP
Well if you're in financial dire straights and the Republicans continue to diddle and delay you may have little choice.
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