(WBEN) - Many people are still looking for ways the recently passed federal stimulus can help them through troubling times past the ‘checks in the mail’ that have grabbed headlines.
Among the ways the stimulus may help some Americans is loosening restrictions on withdrawals from individual retirement accounts. While money taken out of these accounts will still be taxed, a 10% on some early withdrawals will be waived.
People are free to withdraw up to $100,000 from an IRA account without penalty, provided you have been impacted in some way (loss of job, gotten sick) by the Coronavirus.
“Where that can really be helpful, there’s going to be some interim time before aid arrives,” said Ed Hutton, Director of the Financial Markets Lab at Niagara University.
“It could be two to three weeks, and i think it may be even longer before people start to get the enhanced unemployment.”
Because of that gap, Hutton believes an early withdrawal from an IRA account could be used to get someone through a tough time before the other relief kicks in.
“I want to caution people that we will get through this, and be very careful about taking money out of those accounts.”
In other words, just because you can, doesn’t always mean you should.
What could be a better option?
“If you’re in an employer-sponsored 401K, you may be able to borrow money from that 401K.”