401(k) Hardship Withdrawals Are on the Rise, According to Recent Report. Here's What They Are, and What They Mean for Your Retirement Account.

One common piece of investing advice suggests only investing money you won't need in the next five to 10 years. The same principle applies when saving money in defined contribution plans, such as a 401(k). Though they have many benefits, withdrawals from these retirement-focused accounts come with a tax bill and 10% penalty if they occur before you reach 59 ½ years of age. In other words, putting money in a 401(k) that you might need before you get close to retirement age is not a good idea.However, in some cases, the IRS permits penalty-free withdrawals, known as hardship withdrawals. And according to a recent report from Vanguard, a leading investment advisor, these withdrawals are on the rise. Here's a look at Vanguard's data and what hardship withdrawals can mean for your retirement planning.Vanguard's annual "How America Saves" report reveals important data concerning the financial habits of almost five million defined contribution plan participants. However, since these figures are based only on the plans Vanguard provides record-keeping services for, they may not apply to the overall population.Continue readingWeiter zum vollständigen Artikel bei MotleyFool Weiter zum vollständigen Artikel bei MotleyFool