MORE AMERICANS ARE TURNING TO FOR A ONE KS IN EMERGENCIES. MORE WORKERS ARE ABLE TO MAKE THESE HARDSHIP WITHDRAWALS THANKS TO A SERIES OF MOVES BY THE GOVERNMENT TO EASE WHAT WAS ONCE A MORE DIFFICULT AND COSTLY PROCESS. TAYLOR HERNANDEZ JOINING US NOW WITH A CLOSER LOOK AT WHAT YOUR OPTIONS ARE. TAYLOR. WELL, FROM THE GROCERY STORE TO RENT TO JUST ABOUT EVERY OTHER BILL YOU’RE PAYING RIGHT NOW, THE ECONOMY IS GETTING EVERYONE’S BANK ACCOUNT. AND FOR SOME DESPERATE TIMES MEAN DESPERATE MEASURES. SOME ARE TAKING MONEY AWAY NOT ONLY OUT OF THEIR SAVINGS, BUT ALSO TAKING IT OUT OF THEIR LONG TERM RETIREMENT, WHICH IS VERY, VERY SHORT SIGHTED BUT VERY, VERY TROUBLING. DOMINIC CALABRO IS THE PRESIDENT OF FLORIDA TAX WATCH, A NONPARTIZAN WATCHDOG GROUP. HE SAYS THE RAMIFICATIONS OF THE PANDEMIC AND THE SKYROCKETING FLORIDA HOUSING MARKET ARE PUTTING FAMILIES ACROSS THE STATE BEHIND A HOUSING AND RENTAL COSTS ARE JUST GOING THROUGH THE PROVERBIAL ROOF. FOR AMERICANS LOOKING TO THEIR 4A1K AS THE ANSWER, WEST PALM BEACH FINANCIAL EXPERT MELISSA GANNON HAS A WARNING. IF YOU TAKE IT OUT EARLY AND BUY EARLY MEANING BEFORE AGE 59 AND A HALF, YOU GET ON TOP OF HAVING TO PAY THE INCOME TAX ON IT. YOU HAVE TO PAY A 10% PENALTY. GANNON SAYS MOST PLANS FOR LARGE CORPORATIONS DO ALLOW YOU TO BORROW AGAINST YOUR OWN MONEY UP TO $50,000. THIS IS ONE WAY TO ACCESS YOUR 401. K WITHOUT PAYING THAT 10% PENALTY. EXPENSIVE WAY TO GET AT YOUR SAVINGS IS REALLY THE BOTTOM LINE. THIS IS HER ADVICE. CALL THE ADMINISTRÉ OR OF YOUR PLAN TO FIGURE OUT WHAT YOUR OPTIONS ARE. THAT IS STEP ONE. IF YOU RAN INTO AN EMERGENCY AND JUST NEED A SMALL AMOUNT OF MONEY, LOOK INTO THE SECURE ACT THAT NEWLY ENACTED LEGISLATION DOES ALLOW YOU TO WITHDRAW $1,000 FROM YOUR 4A1K PENALTY FREE. AND LASTLY, WORK WITH THE ADMINISTRATOR OF YOUR PLAN TO FIND OUT IF YOU’RE ELIGIBLE FOR ANY EXCEPTIONS. COVID DISABILITY OR HARDSHIP RELATED. I JUST ALWAYS ENCOURAGE PEOPLE TO FIND OUT, YOU KNOW, GET INFORMED BEFORE YOU START WITHDRAWING. GOOD ADVICE THERE. AND IF YOU’RE STRUGGLING FINANCIALLY, I DID LINK SOME RESOURCES FOR YOU IN THIS STORY ONLINE. I ALSO INCLUDED ALL OF MELISSA GANNON’
'Very, very troubling': More Americans are pulling from their 401K to make ends meet
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Updated: 5:36 PM EST Feb 2, 2023
As the inflation crisis continues, more Americans are turning to their 401Ks for help making ends meet.“Some are not only taking it out of their savings, but they are also taking it out of their long-term retirement," Dominic Calavro, the president and CEO of Florida Tax Watch, said. "Which is shortsighted, but very, very troubling.”Melissa Gannon is the manager of financial planning at Castle Wealth Management in West Palm Beach. She says they often encourage clients to borrow against their 401K instead of withdrawing from it when possible.Resources: Food banks, pantries on the Treasure Coast and in Palm Beach County“A lot of plans allow you to borrow from it," she said. "So, they will let you take out the max of $50,000, so you can take that amount out of it, and you’re borrowing against it.”Gannon explained when someone is younger than 59, and a half, a 10% penalty has to be paid on top of any income taxes when money is withdrawn from a 401K.“It's an expensive way to get at your savings, is really the bottom line,” she said.Gannon suggested anyone considering a withdrawal from their 401K reach out to the plan's administrator first.“I just always encourage people to get informed before you start withdrawing.”She also suggests looking into the Secure Act, which allows people to take $1,000 from their 401K account without paying the 10% penalty.Gannon said the plan administrator will know if you can borrow against it or if you are eligible for any Coronavirus, disability or hardship-related exemptions.
WEST PALM BEACH, Fla. — As the inflation crisis continues, more Americans are turning to their 401Ks for help making ends meet.
“Some are not only taking it out of their savings, but they are also taking it out of their long-term retirement," Dominic Calavro, the president and CEO of Florida Tax Watch, said. "Which is shortsighted, but very, very troubling.”
Melissa Gannon is the manager of financial planning at Castle Wealth Management in West Palm Beach. She says they often encourage clients to borrow against their 401K instead of withdrawing from it when possible.
Resources: Food banks, pantries on the Treasure Coast and in Palm Beach County
“A lot of plans allow you to borrow from it," she said. "So, they will let you take out the max of $50,000, so you can take that amount out of it, and you’re borrowing against it.”
Gannon explained when someone is younger than 59, and a half, a 10% penalty has to be paid on top of any income taxes when money is withdrawn from a 401K.
“It's an expensive way to get at your savings, is really the bottom line,” she said.
Gannon suggested anyone considering a withdrawal from their 401K reach out to the plan's administrator first.
“I just always encourage people to get informed before you start withdrawing.”
She also suggests looking into the Secure Act, which allows people to take $1,000 from their 401K account without paying the 10% penalty.
Gannon said the plan administrator will know if you can borrow against it or if you are eligible for any Coronavirus, disability or hardship-related exemptions.
