![]() But it may be necessary in a desperate situation. If it can be avoided, it should not be done as it would negatively affect people’s retirement. Allowing people to withdraw from their 401(k) funds would give them access to money that could be used to make mortgage or rent payments, deal with medical emergencies, and handle other expenditures that might be necessary. YES: With the economy in extreme distress and many people losing their jobs, people need as much financial flexibility as possible. But if needed this is why we do have saving programs like 401(k). Hopefully letting them avoid raiding their savings program. The $2 trillion dollar aid package just approved should assuage a lot of concerns and support those in dire need. But the resulting taxes will need to be paid, just like the program was designed. YES: Every option needs to be on the table. Cash payments and more unemployment benefits would be more helpful to them. Waiving penalties will not help the half of workers who have no such plans. Waiving penalties would help those seeking any possible resources.This should be one of the last options people choose since they will suffer the stock market’s precipitous decline and will later need those retirement savings. YES: With job losses climbing into the millions, many Americans desperately need a backstop. Lynn Reaser, Point Loma Nazarene University Other considerations: raise the 401(k) and IRA maximum for a period of time so Americans can take advantage of replenishing their accounts when markets return to normal, give retirees a tax “holiday” for required minimum distributions (RMDs), and briefly suspend the RMD so older Americans are not mandated to withdrawal funds starting at age 72. If they withdraw too much in fear-based decision making, then they won’t be ready for retirement in the future. The coronavirus pandemic will eventually abate, and Americans will still need retirement savings. YES: But there should be a reasonable limit on what could be withdrawn without penalty or tax implications. However, in extraordinary times, such as the current COVID-19 pandemic, Americans should be permitted to access their savings without penalty, particularly if they need the funds to offset lost earnings due to furloughs or illness. ![]() Under ordinary circumstances, these disincentives are prudent. To discourage withdrawals for other purposes, taxes and a 10 percent penalty is assessed on early withdrawals. YES: A 401(k) and other defined-contribution plans were established to allow Americans to save for retirement on a tax-deferred basis. While noting the potential of people cashing out during a low market - and jeopardizing future retirement, unobstructed access to any savings for food security, housing and key necessities to keep afloat is essential. ![]() The provision should require proof of hardship. Congress should waive the early withdrawal penalties and related taxes for 401(k) plans. YES: The coronavirus is a huge threat to family economic conditions. Reginald Jones, Jacobs Center for Neighborhood Innovation Allowing them to withdraw their own money from a retirement account is not only a good idea, but the humane thing for the federal government to do. ![]() Hundreds of millions of Americans will be adversely affected by this pandemic. There are already hardship withdrawal provisions in place to help with economic hardship, paying college tuition, or funding a down payment for a first home. YES: Unprecedented times call for unprecedented measures. However, a withdrawal would reduce retirement savings and possibly create a tax obligation, so this option has some negative consequences. Removing the penalty would make withdrawals from a 401(k) more feasible. Given the economic damage caused by the severity and suddenness of the pandemic, affected individuals should have multiple options from which to choose to cope with the financial disruptions to their lives. YES: The pandemic will lead to job losses and hardship. ![]()
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