Raise the $1,000 Limit on Emergency 401(k) Withdrawals
The unexpected happens. Savers should be allowed to take out up to $3,500 from retirement accounts penalty-free.
More backup needed.
Photographer: J Studios/Digital VisionThanks to new legislation, Americans with retirement plans now have easier access to cash in the event of a financial emergency. A provision in the Secure Act 2.0 that took effect this year allows individuals with 401(k)s and other retirement plans to withdraw up to $1,000 without triggering a 10% early distribution penalty.
The change will give workers a little more breathing room should they confront a job loss, a sudden car repair or any other unforeseen event. Importantly, access to the funds could help spare people from having to use credit cards with devastatingly high interest rates when the unexpected arises.