Understandably, you need access to your retirement funds now. An ancillary benefit to retirement funds is the ability to gain access in case of an emergency, so don’t feel too bad about accessing the funds as you have good cause. Regarding the fees, this is a little difficult to answer. You did not specify the type of retirement account. You stated it was a traditional retirement account which leaves several possibilities. I will assume it is a 401 (k) as you stated you are subject to a 10% “fee”. Based on this assumption, I think you are assuming too low of an amount that you will lose. You need to remember that you are taxed on the full account balance. Effectively, you lose 10% of the 17k and then are taxed on the full account balance, or 17k. Second, assuming you will pay the same taxes in your current income bracket is a mistake. Remember that the 17k will be added to your annual income and the taxes will be based on the aggregate amount. Adding 17k to your taxable income will usually push you into a higher tax bracket.
Though this may not solve your problem, I will remind you that most retirement accounts have loan or hardship features. I would suggest contacting your provider and asking if you are eligible for one of these programs. It may make more sense to take a loan against your retirement fund. It can solve your short-term problem while maintaining the long-term integrity of the account.
I hope this information helps you Find. Learn & Save.
Best,
Bill
www.bills.com/
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