(HorizonPost.com) – The coronavirus pandemic caused significant financial issues for families across America in 2020. Many were forced to access 401(k) accounts just to survive. A temporary CARES Act measure eliminated the typical penalties associated with withdrawing funds before the normal 59.5 years of age set by law.
Before tapping into your #401(k) due to #Covid-19, here are a few things to consider.https://t.co/T0vdKx0M8W pic.twitter.com/2yYOR5exFK
— BDF LLC (@BDF_LLC) October 28, 2020
A person with one of these retirement packages can withdraw $100,000 — or the entire balance, if less than that — without paying the typical 10% penalty. The same law also allows individuals to replenish funds within five years without owing any income tax. This is a first among the various disaster-related measures of this type.
You might assume that a measure like this would benefit most families while indirectly boosting the economy. According to financial experts, this simply isn’t the case.
Companies managing 401(k) accounts prepared for an onslaught of requests shortly after the measure passed in March of 2020, considering the devastating number of people out of work. But nearly nine months later, financial management firms reported that only 4 to 5% of those monies had been accessed. It seems most eligible Americans chose to refrain instead.
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