GREENSBORO, NC -- You have a pot of money. It's just sitting there. It's called your 401K. It's your retirement savings. But couldn’t it also be:
a way to help to pay for college, fix up the house, that bucket list vacation that would finally bring all your family together?!?!?
The short answer is yes, but not without paying a penalty. “Think it through,” says Certified Financial Planner Matt Logan. “Don’t just jump to take money out of it because it does impact long term retirement opportunities.”
Penalty #1:You rob your retirement
Penalty #2: You have to pay a fine for taking it out early
The only exception for that penalty or fine is a hardship. And while it depends on each individual 401K plan, it usually is something life changing like disability or a major medical issue.
You ready to hear what absolutely doesn't count as a hardship although you may think otherwise?
“Vacation is never supposed to be a hardship, unless your family is very difficult, “ jokes Logan. “Running up credit card balances because you needed a lot of stuff from Amazon is not a hardship, it's self-imposed. And you can take a loan for your kid’s education, but i haven’t found a loan for your retirement yet, so that's a problem.”