Penalty-free withdrawals when adopting or having a child

You probably already know that if you chose to withdraw money from tax-deferred retirement plans before you turn 59 ½, you’ll be subject to a 10% penalty. Of course, there are exceptions! Seniors can avoid the penalty in the case of total disability, divorce, medical bills that go over a certain threshold or death.

Thankfully, the list of these hardships has been expanded. It now includes funeral costs, college fees and tuition for both family members and employees, medical expenses also for both family members and employees, money needed to avoid foreclosure or eviction or money needed for damages to an employee’s home.

In addition, the SECURE act now allows both IRA account holders and 401(k) contributors to make withdrawals of up to $5,000 without penalities within a year of adopting or having a child.