When you invest your money into retirement savings you should make every effort possible to not touch your funds until retirement age. IRAs and similar accounts typically come with penalty fees if you withdraw funds before age 59½. Of course, life can throw unexpected curve balls your way.
If you find yourself with mounting medical expenses, you may be able to withdraw funds from your retirement savings early and without penalty.
Withdrawing Funds From Retirement Savings To Pay For Medical Expenses
If you have a stack of medical bills you can’t pay, you may be eligible to withdraw money from your retirement savings to help pay the bills — penalty free. In order to be eligible you must meet the following criteria:
It’s important to note you can withdraw any amount of funds to cover medical bills. However, if the amount you withdraw does not meet the above listed criteria, you will need to pay a 10 percent early withdrawal penalty fee, as well as state and federal taxes on the funds withdrawn.
Withdrawing Funds From Retirement Savings To Pay For Medical Insurance Premiums
If you find yourself struggling to afford high health insurance premiums, you may also be able to make withdrawals from your retirement savings, penalty free, to cover your premiums. In order to qualify for penalty free withdrawals you must meet the following criteria:
Again, you may make additional withdrawals to cover medical premiums that do not qualify, but you will be assessed state and federal tax and be subject to a 10 percent early withdrawal penalty fee.
Withdrawing Funds For A Permanent Disability
A permanent disability may qualify for early withdrawal without penalty. To qualify you must meet the following criteria:
Again, if you do not qualify for penalty free withdrawals you can opt to pay the penalty fees if you do need to withdraw the money before you turn 59½.
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Jeff Rose is an Illinois Certified Financial Planner. He blogs at Good Financial Cents and Soldier of Finance. He loves Crossfit workouts, writes about Roth IRA rules and craves In-N-Out burger. You can follow his updates on Twitter.
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