More Americans are tapping their 401ks because of financial distress. In fact, the number of people who made a hardship withdrawal surged 36% from the second quarter of 2022! If you’re thinking of tapping your 401(k) early, Peter with Richon Planning and Erin Kennedy explain how it works and the risks, including:
- How can I withdraw money from my 401k without penalty?
- How the passage of the SECURE Act made hardship withdrawals even easier
- The lost “opportunity cost” of tapping your 401(k)
Keep in mind, if you’re not 59.5 and you make a withdrawal, not for a hardship, you’re going to face a 10% penalty and income taxes! Whereas, with a Roth account, you can always tap your contributions without facing any penalties.
