OPINION: Over the coming year, Americans could face an economic tsunami possibly more devastating than the 2008-09 Great Recession. Full, unobstructed and temporary access to retirement savings will help them stay afloat, writes Jonathan Burton.
The coronavirus threat to Americans is massive, and so will be the resulting economic hit. You’re going to need enough cash to cover monthly living expenses for the next year, at least.
Currently, if you’re under age 59 1/2, money taken from a 401 or traditional IRA is taxed as ordinary income, as if you earned it on the job, and subject to an additional 10% penalty. This includes withdrawals due to financial hardship and job loss — inevitabilities of the coming coronavirus recession. Already the Dow Jones Industrial Average DJIA, -3.03% is down 37% from its February peak, and American jobs are at risk.
In normal times, that would be true. This waiver goes against the explicit mandate of employer-sponsored and individual retirement plans — make it difficult to withdraw money so people are forced to save. But desperate times require desperate measures.
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