20% of Americans Plan to Make This Dangerous Move During COVID-19
Many Americans are struggling during the COVID-19 crisis, and that includes the millions who have already lost their jobs. It's not surprising, then, to learn that 20% of people say they'll likely take a 401(k) withdrawal in the near term to put cash in their pockets, according to the May 2020 Simplywise Retirement Confidence Index. But that's a decision they might sorely regret.
Normally, tapping a 401(k) or IRA prior to age 59 1/2 results in a 10% penalty on the amount you remove. But thanks to the CARES Act passed in March, you can now withdraw up to $100,000 without penalty from a retirement plan if you can show you've been negatively impacted by COVID-19. That's a nice option to have in theory, because it's easier to remove money that's yours from a retirement plan than to go out and qualify for a loan. But taking an early retirement plan withdrawal is a bad idea for three big reasons.
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Source Fool.com
