It is no wonder that most people are looking into their 401k options when our economy is on such hard times. We all know that things financially are not as stable anymore and with large debts piling around us, we are interested in options to save us from drowning. There are possibilities to assist you in paying off debts and save your home or family. It sounds too good to be true, and in some ways it may be, but with the 401k withdrawal guidelines you can decide whether or not to use your 401k money. There are simple rules and easy to understand.

The first thing you must understand about the 401k withdrawal guidelines is that you can take money out of your 401k account when you reach retirement age. When is retirement age? Well I will tell you, it is when you reach the age of exactly fifty-nine and half years old. The government takes this age seriously, so do not get any wild ideas about trying to get money out as soon as you turn fifty-nine. The six months do matter. And if you try to take money out of there soon you will receive a penalty.

That’s right! According to the 401k withdrawal guidelines you will suffer a penalty for pulling money out early. So you may ask why people are taking money from their retirement early. For them the benefits out weigh the costs. Depending on their circumstances they have decided that the penalty is worth having the money now. Here is how it all works. For certain hardship reasons you can be allowed to withdraw money from your 401k. The 401k withdrawal guidelines say that to take the money is okay as long as it constitutes a dire emergency. Examples of these circumstances are like preventing foreclosure on a home, making crucial repairs your house, trying to pay for college tuition room and board for your family, or vast amounts of medical bills that are overcoming you. There are of course more dire situations that would allow one to withdraw from their 401k to pay for more important pressing financial needs.

Sounds wonderful right? There is more to it than that. Do not forget the penalty that is incurred when you withdraw the money. This penalty is harsh to discourage people from taking money out of their retirement fund. The penalty is a ten percent additional tax on the money withdrawn. Now remember that when the money is put into the 401k plan it has not been taxed. Upon withdrawal you have to pay taxes on the money. Yet when you pull out the money from the 401k early, not only do you have to pay the regular tax but the additional ten percent tax penalty.

It may be worth it to be able to withdraw money from your 401k in accordance with the 401k withdrawal guidelines. Calculating your risks and benefits is the best way to ensure that you make the right choice for your family.