Why Early 401(k) Withdrawals Are a Bad Idea

“As policymakers explore every option to get more money in the hands of people to help them cope during the pandemic, raiding retirement accounts is an easy target. Allowing people to withdraw from their 401(k) accounts without having to pay a penalty makes it easier to accomplish that objective, as permitted by the March 2020 CARES Act and the second stimulus bill of December 2020.

Those moves have reignited a familiar debate: Should penalty-free withdrawals from retirement accounts be encouraged or not? “It’s a terrible idea,” said Olivia S. Mitchell, executive director of the Pension Research Council at Wharton, in a recent interview on the Wharton Business Daily show on SiriusXM.” Click here for excerpts from the interview.

(Source: The Wharton School)
9-minute read.