IRS allows $1000 penalty-free emergency withdrawals from retirement accounts, reflecting tough economic times.

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Under the new SECURE 2.0 Act, you can now withdraw up to $1,000 from your retirement accounts, such as 401(k)s and IRAs, without incurring the usual 10% early withdrawal penalty. This change is designed to help individuals access emergency funds more easily during tough economic times.

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However, it’s important to note that while the penalty is waived, you will still need to pay ordinary income taxes on the amount withdrawn.

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Sources:

https://www.marketplace.org/2024/07/22/its-easier-now-to-pull-emergency-money-from-a-retirement-account/

https://www.kiplinger.com/taxes/new-early-withdrawal-tax-rules


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