If You Have To, Take The Cannoli

I don’t recommend withdrawing from a retirement account but if you have to, this is the perfect and elegant time to do it.

Double-clicking on my earlier post about breaking personal finance rules that you can break during the pandemic, there’s new rules about 401(K) withdrawal that you should know.

In addition to giving Americans a one-time stimulus payment and paving the way for expanded unemployment benefits, the CARES Act has temporarily changed the rules about withdrawing money from retirement accounts. You can now take penalty-free withdrawals from your IRA or 401(k) up to $100,000 without facing the usual early withdrawal fees. 

So this is a good time to withdraw money from a retirement account. Obviously, you don’t want to do that, but the need for cash due to medical bills, mortgage payments, and other emergencies may require you to do it. Right now, you have to identify what assets you have that are liquid. Retirement accounts are considered to be cash equivalents. It’s an asset that can be easily converted into cash.