If you have to dip into a retirement account, where can you do that?
So well, for one case, a very good option, many for one case allow for what’s called a hardship withdrawal.
You have to prove that you’re going through a little bit of a hardship, but once you do that, they’ll allow you to take some money out without any penalty and possibly pay it back. So, it is a very good option.
Number one, if you think it’s a short-term situation and you’ll be able to pay it back.
And then also, if you have a 401K that allows for hardship withdrawals, you may not have to pay it back. That’s the real advantage of dipping into a 401k.
However, I always caution people, you designed that program for your retirement, so there are other options that we can look at. But yes, it is an option, and you should know the rules about taking money out of it prior to doing it.
For more answers to common retirement planning questions, check out the rest of the Question Mark: Retirement Planning series.