IRS makes it easier to use your retirement account as an ATM

[LAUREN TAYLOR]

FOR YEARS – MANY AMERICANS HAVE STRUGGLED TO BUILD EMERGENCY SAVINGS… AND IT’S ONLY GOTTEN WORSE WITH INFLATION AND HIGH INTEREST RATES SINCE THE COVID-19 PANDEMIC. 

ACCORDING TO BANKRATE – NEARLY 6 IN 10 U.S. ADULTS DON’T FEEL COMFORTABLE WITH THEIR LEVEL OF EMERGENCY SAVINGS… AND 27 PERCENT HAVE NO SAVINGS AT ALL.

BUT NOW – THE IRS IS MAKING IT EASIER FOR AMERICANS TO GET A THOUSAND DOLLARS WHEN THEY NEED IT IN AN EMERGENCY – WHICH CAN BE ANYTHING FROM UNEXPECTED MEDICAL EXPENSES TO CAR REPAIRS TO NEEDING GROCERIES. 

HERE’S A BREAKDOWN OF HOW IT ALL WORKS… 

‘THE ‘SETTING EVERY COMMUNITY UP FOR RETIREMENT ENHANCEMENT’ – OR SECURE ACT HAS UNDERGONE CHANGES SINCE LAST YEAR. 

UNDER THE NEW LAW –   THOSE WHO NEED IT CAN NOW TAKE A THOUSAND DOLLARS OUT OF A TRADITIONAL RETIREMENT ACCOUNT – WITHOUT PENALTY. 

THE MONEY DOES *NOT* HAVE TO BE PAID BACK – BUT IF IT ISN’T… 

YOU’LL HAVE TO PAY INCOME TAX ON THE MONEY.

YOU CAN ONLY MAKE A WITHDRAWAL ONCE A YEAR… 

AND YOU HAVE THREE YEARS FROM WHEN YOU MAKE THE WITHDRAWAL TO PUT THE MONEY BACK IF YOU WANT TO AVOID TAXES.

YOU ALSO CAN’T LET YOUR BALANCE FALL BELOW ONE THOUSAND DOLLARS.

SO – IF YOU ONLY HAVE 15-HUNDRED DOLLARS IN YOUR RETIREMENT ACCOUNT… YOU CAN ONLY BORROW 500 FROM YOURSELF.