The Internal Revenue Service is now allowing more Americans to withdraw money from their retirement plans without penalty if they've been impacted by COVID-19.
The IRS said Friday if you got a pay cut or were delayed in starting a job due to the virus, you can now take up to a $100,000 from your 401(k) without a 10 percent penalty. Most financial experts typically advise against taking money out of a 401(k). But Pamela Yellen, financial security expert and founder of Bank On Yourself, says the crisis has left people scrambling to pay their bills.
“Most people already didn’t have anywhere close to the amount of money that they needed for a comfortable retirement. The average household that’s near retirement has a $135,000 combined,” Yellen said.
The updated criteria, which is part of Congress’ CARES Act, also allows spouses or family members to take out money if someone in the home was directly impacted by COVID-19.