The Dallas News featured a September 3, 2008 Washington Post article that reported how many people are feeling the need to tap into their 401(k) plans just to survive.
The article stated that, “Hard economic times are driving some people to take actions that could jeopardize their futures”. The article noted that there is an increase in people tapping into their 401(k) plans to supplement their financial needs, but that people who do are jeopardizing their long term retirement plans.
A person must show severe financial need. Moreover, they would be subject to a 10% penalty tax if younger than 59 ½ and their account would be frozen for six months after the withdrawal wherein neither the employee nor employer may contribute. People who are feeling the effects of this difficult economy, who are being inundated with bills that have now surpassed their income, should be aware that in most circumstances their 401(k) is protected should they need to file for bankruptcy. There may not be a need to diminish your retirement savings to survive in today’s economy.
For more information on bankruptcy – who it’s for and what assets may be protected please contact Fears Nachawati Law Firm, Phone (214) 890-0711, 4925 Greenville Avenue, Suite 715, Dallas, Texas 75206.