The federal government may have just given you another option to pay for child-related expenses. Both the House and the Senate recently passed a bill that changes some of the retirement legislation, including when you can withdraw money from your 401(k).
The Setting Every Community Up for Retirement Enhancement Act, or SECURE Act, is a $1.4 trillion spending deal that expands workers’ access to their retirement funds. While the act includes plenty of fine print, one provision is of extra significance to parents.
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The SECURE Act allows new parents who have recently had a baby or adopted a child to withdraw $5,000 from a 401(k) account without repaying it or incurring the standard 10 percent penalty.
Not only can a parent make this withdrawal, but both of the baby or child’s parents can take out $5,000. This means couples can withdraw a total of $10,000—$5,000 from each individual retirement account.