In the past, there were a few ways you could avoid the penalty. Congress recently added several more, and some of those exceptions allow you to repay the money within three years. That would allow you to get a refund of the taxes you paid and — best of all — allow the money to start growing again, tax deferred, for your future.
You’re still better off leaving retirement funds alone for retirement, says Erin Itkoe, director of financial planning at Tarbox Family Office, a wealth management firm in Scottsdale, Arizona. If you can’t, though, you could at least limit the damage from taking the money out early, she says.
In my latest for the Washington Post, learn safer ways to raid your retirement, if you have to.
What are the best ways to structure an investment portfolio so you can generate a cash flow to suppliment your social security and what are the best investments to buy? While most stock and bond funds have yield, they don’t generate cash flow since their dividend yields are low. So I have been stuck buying treasuries, CDs, and a few agencies. Anything else I should consider?
Hi, Andrew. I don’t advise individual clients. I’d suggest talking with a fee-only financial planner who can review your situation and provide personalized advice.