The IRS has clarified a provision of the SECURE 2.0 Act passed in 2022, now expanding the use of tax-deferred retirement accounts as emergency funds. Previously, retirement savers with an “immediate and heavy” financial need could technically make an early withdrawal from their 401(k)s and traditional individual retirement accounts. However, that early withdrawal would be subject to income tax, and those under age 59½ typically owed a 10% tax penalty.Now, you can make one withdrawal of $1,000 per year to cover personal and family emergency expenses without owing the 10% penalty. All you need to do is "self-certify" that you need the money for an emergency. Here's what to know about how this
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