Joyce said he has seen people in their 30s or 40s who withdraw money from their 401(k) account or IRA to pay for a vacation.
What they often don’t realize is that not only will they pay taxes on that withdrawal, they also are subject to a 10 percent early withdrawal penalty.
“Sometimes even if they know it, they ignore it because they want the money for vacation,” Joyce said.
On top of the tax implications, taking money early from a retirement account essentially is robbing from your future.
Say you withdraw $5,000. If you had left it in your account, and the money was invested in stocks and growing 8 percent annually, that $5,000 would become more than $50,000 in 30 years.
So what you actually robbed from your retirement is that larger number.
Be the first to comment