Figure Costs Before Tapping Retirement Plan Investor's Business Daily (08/10/01) Vol. 29, No. 17 p.B2; Moreau, Dan
Retirement planning experts advise investors to reconsider withdrawing money from their retirement accounts. Pulling money from either an IRA or 401(k) account can be costly, and dipping into them too often can derail a retirement plan altogether, advisers warn. Money can be withdrawn from an IRA without the standard 10 percent penalty to finance higher education expenses or a first-time home purchase, or if the person is disabled. Withdrawals for any other reason are subject to a 10 percent penalty. Tapping a 401(k) also comes with drawbacks, although in some cases, a person can claim a hardship withdrawal for emergencies such as medical expenses, funeral expenses, or to avoid foreclosure on a principal residence.