, Columnist
Early 401(k) Withdrawal Penalty Poses an Unfair Burden
People in dire need of funds shouldn’t have to pay a 10% fee to tap their own savings.
Overly restrictive.
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Tapping your retirement account before the age of 59 1/2 comes at a notoriously steep cost: a penalty tax of 10% of the withdrawal amount.
The penalty is there for a good reason, in theory. These savings are precious and should only be used as a last resort prior to retirement. Money taken out early will miss the opportunity to grow tax-free and compound over time.