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401(k) is Not for Emergencies
 
 

Withdrawing from your 401(k) for emergencies may be detrimental to your savings. Not only do you have to pay taxes on the withdrawals but you’ll also be hit with a 10% penalty fee for early withdrawal.

 

Key Takeaways:

  • You’ll be better off if you save for an emergency in a savings account and don’t touch your 401(k) retirement savings.

  • Three to six months of income is typically recommended for an emergency fund.

  • Consider taking a 401(k) loan where the interest is paid back to your account rather than taking a penalty for an early withdrawal.

 

Read more here:

http://www.usatoday.com/story/money/personalfinance/2016/11/09/retirement-savings-401ks-early-withdrawal-emergency-savings/91347786/

 

 
 
 
 
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