401k question

[retired2015b2d]

Hubby was laid off and we may consider him having him retire if nothing comes along. I would like to pull our living expenses from my 401k. I believe the 10 percent early with draw penalties is waved this year. I’m 58 this year and always planned to work on my 401k first.

Question 1. Is the waiver on 10 percent early penalty good for just this year or also for next year?

Also Health care question. We were able to go back under my old employer high deductible plan. It is affordable for family of 4 with dental about 1100 a month but a max of 6k person and 12 for family.

Question 2. Is there anyway to put pretaxable money into a plan to save to pay for these expenses pretax? I have no account now. Just want to know if you can creat one now or I’m too late.

 

[cathy63]

For Q2: if you have a qualified high deductible plan, then you can open an Health Savings Account and put pre-tax money into it. Check with your employer to make sure your plan is HSA eligible and to find out whether they offer an HSA to go with it. If the plan is eligible and they don't offer an HSA, then you can open one at Fidelity for free.

 

[cathy63]

For Q1: the 10% penalty is only waived for this year. You can take out up to $100K this year if your husband's layoff was due to Covid-19 (or if he cannot find another job due to Covid-19) and spread the tax on the withdrawal over three years. Your 401K plan has to make a choice to allow CARES Act withdrawals in order to take advantage of this though.

 

[pb4uski]

+1 to both of cathy63's responses.

 

[Markola]

Search “The Rule of 55” and double check your plan’s rules with your 401k administrator. The 10% might be waved for you or your husband if you’ve separated from your jobs.

In fact, see this discussion: another 55 rule question
https://www.early-retirement.org/forums/showthread.php?t=102684