How To Get Money From 401k Retirement Plan
When the mortgage is due, the gas tank is empty, or your spouse’s job has just been cut, it’s natural to search frantically everywhere for the money to keep afloat; you might wonder how to get money from 401k retirement plans. Getting money from a 401k Retirement Plan may seem like the only good option. This is a type of investment plan that allows a United states worker to save for retirement while having the savings invested without any taxes charged on the saved money and the interest until withdrawal at maturity which is at age 59 ½.
To get the money from your 401k investment account had not always been an easy process and you are usually penalized for doing so by paying high interest rates on the borrowed money with other attendant disadvantages; however, there are two viable options for doing that which are: loans and hardship withdrawals.
Most 401k retirement plans come with a loan provision. You can borrow money from it and pay it back to yourself without incurring stiff penalties and you can borrow up to half of the money in your account, but not more than $50,000. This loan is usually at competitive interest rates and is expected to be paid back within 5 years.
If you really want to do serious damage to your retirement goals, consider taking a hardship withdrawal. You'll have to pay income taxes (which run as high as 35%) on the money as well as a 10% federal penalty for early withdrawal.
When you must have money to pay for college or cover the funeral expenses for a family member, first cover the down payment to avoid eviction on your residence or pay medical bills and there seems to be no foreseeable way of getting money before tampering with your 401k plan, Then consider getting money from your 401k retirement plan.