News reports of economic downturn make many of us concerned. The wild roller coaster of the stock market is not rising with our hopes and instead is scarily plunging downwards. Many of us are asking ourselves questions like: How is my 401k in this current market? What are the rules and regulations dealing with my 401k and early withdraws? Is my future retirement stable if I take money out? Or what would be my best option concerning my 401k in this current market? Most of us are not interested in paying large sums of money to get a financial planner to help us decided and calculate our best option concerning our 401k plans and current financial woes. Instead of paying someone to find out a few quick rules and regulations concerning 401k, this tutorial will give you the information you need to make the right decision.

There is a penalty for withdrawing money out of your 401k. Depending on the type of retirement plan you have your money invested in, you will incur a different penalty. For 401k and 403b plans, there is a ten percent additional tax. When contributions are made into your 401k plan, it has not been taxed. Upon pulling it out, you will pay taxes on the money, if pulled out early you will pay an additional ten percent tax. How does this affect my 401k in this current market? Well it may not be worth it to access your 401k account and it may be worth it. You will have to calculate your losses or gains, if and when you make an early withdraw. There are a few reasons that you can obtain the money without penalty, but they are rare.

Thinking that maybe a ten percent additional tax is not too bad to pay for a nice trip to the Bahamas? Don’t start buying your tickets quite yet. According to the rules and regulations set in place by the government, you can only take money from your 401k if it is claimed and proved to be a hardship withdrawal. This means that you need the money to pay for astronomical medical bills or funeral expenses, college tuition, pay a payment on your mortgage to stop foreclosure, critical repairs to a home to make it livable, and so forth. These are the only reasons that you are allowed to withdraw money. So ask yourself, is it worth it for my 401k in this current market, to withdraw the money? If you say yes, it is worth my 401k in this current market to save my house and family, then go ahead and use the money wisely. If not, it may be best to wait to access the money until retirement.

As you watch the economy either fall or rise, you do no have to worry any longer. Your family and house is safe. Knowing you can access your 401k money to save you from going down with the economy is a lasting stress relieving pill that no doctor can prescribe.