Retirement plans such as 401(k) are something we may want to keep and look after it for our future. It is true that we all want to make our investments grow and get as much benefit from it as possible. In addition, we all know that leaving it untouched for our retirement would be ideal as well as sensible. Nonetheless, there are very many unexpected events that might cut short our dreams or plans.
Most people retire when they are in their 60s. The earliest could be at the age of 62 and the latest at 70. However, if an unforeseen emergency arises, you may need to change plans. Needing extra money throughout your life could actually happen. No one is free from this. Therefore, it is always best to know what you can do with the money you invested in your 401(k) retirement plan.
There is a chance to withdraw your retirement money from your fund before retiring. It is true that the possibility exists. But you need to know the disadvantages that you have to face and if they are convenient for you. Remember that you must pay taxes if you choose to get your money back. What is more, the younger you are, the more you will have to pay for getting your retirement investments from your 401(k) plan.
Could I withdraw money from my 401(k) retirement plan without penalization?
Luckily, those employees who are undergoing a very difficult personal situation such as cancer can get it without being penalized for it. It is the case for many US citizens that they have to cope with the extra expenses of medical costs. Also, there are some other Americans that would like to buy a house and they cannot afford it. They could also apply for getting money from their retirement plans to make this important purchase.
Apart from the emergency cases that we have already mentioned, there are some other similar situations that involve paying a lot of money. Since they are of vital importance too for these citizens and they can risk their financial situation as well as their personal lives, they are in as well. Take for example the case of those who have a relative who passed away. Getting money from their retirement plans is urgent.
If they come across this event and they run out of money, they might need it to pay for the funeral expenses. Furthermore, there are some students whose studies are under threat. They might not be able to afford the tuition fees or accommodation. In this case, they can opt for it too. Needless to say, you need to prove IRS that your situation is an emergency. Otherwise, they cannot offer you this possibility.