Ask Terry Questions Cares act withdrawal from retirement account

Cares act withdrawal from retirement account

By Terry Savage on June 24, 2020 | Financial Planning / Retirement

Hi Terry
Have been a student of your knowledge for many years
I have a 401-A deferred compensation retirement savings account, I am 58 years old with 27 years of contributions
I would like to make a withdrawal to assist with income loss and reduced hours at work
Is there any way I can do this Without IRS penalty?
How can I convince the fund trustees to assist me in this request? John Hancock holds the funds yet the trustees decide on distributing

Terry Says

The IRS has just temporarly removed the 10% penalty for early withdrawals from 40l(k) plans — but I’m sensing you have a different type of plan — deferred comp? In that case, the employer makes he rules for early withdrawals, especially if you are still working for the company I’m guessing, but don’t know for sure, that the lifting of penalties would apply to this type of plan as well.
But the trustee for the plan will know about the application of the penalty, as well as the rules for early withdrawals.

Now, you didn’t ask, but I’ll give you this advice anyway: Don’t do it! At age 58, the odds are you will live another 20 years, at least! If you think finances are tough right now, during this economic slowdown, when you might be able to find other part-time work — just imagine how you’ll feel if you don’t have money at age 75! Let the money keep growing for your retirement!

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