Having a new baby means all kinds of changes and many new expenses. To deal with these expenses, parents often look to new or alternate sources of income, including potentially withdrawing from retirement savings.
Generally speaking, if a person withdraws from his or her retirement plan prior to turning age 59 ½, doing so results in a 10% tax penalty on the amount of the withdrawal (this is, in part at least, meant to deter folks from dipping into retirement savings intended for the future). Congress has carved out times, though, when individuals may withdraw from their retirement accounts prior to turning 59 ½ without incurring an additional 10% penalty. A change to the Security Act last month now adds becoming a new parent to the list of times when folks can withdraw from their retirement accounts without the 10% penalty. The article below provides additional details and information about this exception.
At Giles & Lambert, we find that many folks, including new parents, who are struggling with debt will withdraw from their retirement plans to try to make ends meet. If snowballing debt or high minimum payments are making you consider withdrawing from your retirement account, bankruptcy may offer you the financial freedom to keep your retirement savings right where it is and still be able to live comfortably. At Giles & Lambert, we offer free half-hour bankruptcy consultations with an attorney in any one of our offices (Roanoke, Martinsville, and Blacksburg). Call us today at (540) 981-9000 to schedule your appointment to see whether bankruptcy may be able to offer you the financial freedom you need.