As much as I love Meryl Streep, I’ve never seen “Sophie’s Choice.” It’s still on my list of must-sees though, and I was reminded of it today when I read that a bill introduced Oct. 5 by Sen. Johnny Isakson (R-Ga.) and Rep. Tom Graves (R-Ga.) would waive the 10% early withdrawal penalty on 401(k) hardship withdrawals up to $50,000 to prevent home foreclosure.
The measure — called the HOME Act (Hardship Outlays to protect Mortgagee Equity Act) — stipulates that the funds would need to be spent within 120 days of receipt, could not exceed 50% of the funds in the retirement account and still would be subject to income taxes.
Obviously, the choice for 401(k) participants between their home and their retirement security is not the same as choosing which of their children gets to live, but I would imagine it’s a wrenching decision all the same. Letting go of dreams of a certain retirement date or lifestyle in the future in an effort to preserve the home you have in the present would be awful.
Awful, but advisable?
Clearly, all wisdom still would make withdrawals — especially such a large amount — a last resort. But if the bill passes, do you think it’s one plan participants should take advantage of? Share your thoughts in the comments.
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