You Can Now Withdraw From Your Retirement Plan if You Have a Baby, but Should You?
Traditionally, money you put into retirement accounts such as a 401(k) or an IRA has to stay there until you reach retirement age. With a few exceptions, withdrawing early generally triggers penalties.
But a recently passed law called the SECURE Act has created a new carve-out from the standard rules. Under the SECURE Act, new parents can make up to a $5,000 withdrawal from qualifying retirement accounts, including 401(k)s and IRAs, without penalties. The money is available to parents who had a baby or adopted a child, and each parent can make a withdrawal. So if each parent has a separate account, the couple could take out a total of $10,000.
This money doesn't have to be paid back, unlike with a typical 401(k) loan, but it does have to be withdrawn within a year of the child's birth or adoption. And since this tends to be an expensive time for families, many parents will likely be tempted to take advantage of this. But while it may seem like a good idea, there are a few big reasons why this should be avoided except in cases of dire financial need.
Source Fool.com
