Discover. Engage. Enjoy. Join us in Miami forLife@50+. Register today



Life Reimagined $10,000 Sweepstakes
New Year's Resolution Contest 2015
Rewards for Good Sweepstakes
Happy African American couple
Life Reimagined Renew Year
Life at 50+ - Register for the Digital Experience
AARP Auto Buying Program

Jobs You Might Like



Ask the Experts

Tapping a 401(k) Early

You can do it, but consider other options first

Q. I was laid off a few months back and want to know if I can tap into my 401(k) to help pay my mortgage, utilities and other bills.

A. Yes, but it would be wise to consider other options first, such as withdrawing money from a bank savings account or cashing in an investment.

That said, it's possible to withdraw as much from your 401(k) as you want — but if you're younger than 59 1/2 you have to pay a 10 percent penalty and regular income taxes on that amount.

So if you're below that age, see whether you might qualify for a hardship withdrawal to avoid paying the penalty (you'd still be liable for the taxes). Certain medical expenses, as well as mortgage payments to prevent foreclosure of a primary residence, are among the potential qualifications.

If you also have an IRA, are unclear about your job prospects and are younger than 59 1/2, look into what's known as a 72(t) withdrawal. This would allow you to take out equal amounts of money for five years or until you reach 59 1/2, whichever is longer. This route avoids the 10 percent penalty.

If you're confident you'll be returning to work shortly, Mike Savage of the Savage Financial Group in East Stroudsburg, Pa., says you can also make a tax-free, penalty-free withdrawal from your IRA if you replace the money within 60 days.

Carole Fleck is a senior editor at the AARP Bulletin.

Topic Alerts

You can get weekly email alerts on the topics below. Just click “Follow.”

Manage Alerts


Please wait...

progress bar, please wait

Tell Us WhatYou Think

Please leave your comment below.

Jobs You Might Like

Discounts & Benefits

From companies that meet the high standards of service and quality set by AARP.

UPS Store membership discount aarp benefits

Members save 15% on eligible products/services, 5% on UPS shipping at The UPS Store®.

membership adt

Small business owners save 20% on new installation of any new ADT security system.

Mujer en la parte de afuera de so negocio

Free quotes for members from the AARP® Small Business Insurance Program.

Member Benefits

Renew today! Members receive exclusive member benefits & affect social change.

Rewards for Good

Your Points Balance:

Learn More

Earn points for completing free online activities designed to enrich your life.

Find more ways to earn points

Redeem your points to save on merchandise, travel, and more.

Find more ways to redeem points

Advance your skills. Transform your career.

Explore your learning possibilities.