Savers are starting to take money out of their 401(k) accounts—despite taxes and penalties involved—assuming it will be replaced as markets continue to surge upward.
The Internal Revenue Service granted relief to those hit by the storm by making it easier for retirement plans to give loans and hardship distributions.
Surviving spouses will either receive their own Social Security benefit or the survivor's benefit, whichever is higher. But they also may get pushed to a higher tax bracket, which. in turn, could mean higher taxes on Social Security benefits.
Make sure workers understand that a 401(k) rollover could trigger a hefty tax bill, and that liquidating assets before the age of 59 1/2 could mean a hefty penalty.
Tapping a 401(k) isn’t good idea, so it would need to be the lesser of two or more evils. And they “would have to be pretty evil evils," says an expert.