New IRS rule lets you tap into retirement funds, but here’s the catch

CHARLOTTE — There’s a new way to get money if you’re in a pinch and have a few grand in a retirement account.

There have always been some exceptions that allow you to access your own retirement money early, but now you can take some just because you think you really need it.

The IRS issued a new rule that lets you take $1,000 from your IRA or 401(k) without needing a reason or having to provide any documentation.

Technically, it’s for “unforeseeable or immediate financial needs relating to personal or family emergencies.” But what constitutes an emergency is up to you, and you don’t have to prove it to anyone. If you withdraw the $1,000, you won’t be penalized the usual 10% for making an early withdrawal.

There are some rules.

• You can withdraw any amount up to $1,000, but there must be at least $1,000 in your account when the transactoin is done.
• You can only make one withdrawal per year.
• You have just three years from the day after the withdrawal to put the money back, or you’ll pay taxes on it as if it was income.
• You can’t take another emergency withdrawal for the three years after, unless you repay it.

Not all employers have adopted this new policy in their 401(k) plans, so check with your administrator.

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