Would Allowing A One Time Limited Amount Withdrawal From 401k Plans Without Penalties Be Helpful To Economy?
In the present economy, what would be the impact of allowing folk a one time withdrawal from their 401k plans without the penalties to pay down debt, catch up behind payments, do home repair or to make targeted purchases to help stimultate the economy. I’m thinking a maximun of 20% of their present balance. And write into law that this can only be done during national emergencies and only in 10 year time spans.
Doesn’t that just delay the problem – so instead of not having any money now, you don’t have any money for later in life? The problem I see with it is that it does not force people to take responsibility for their finances now. If you are living beyond your means, you need to come up with a plan and budget to live with the money you make. People are so used to having everything that sacrifice, work, and budgeting are forgotten concepts. It may not be easy now, but if everyone who are having these issues addresses the probelm and takes responsibility, it will only help in the long run. Bailing people out in the short term does no good.
Vegas – I agree with you to a extent. But something does need to be done quickly. You have people like myself, who do live within our means, who are feeling the brunt of this weakened economy (not a recession according to the government). I don’t know what the solution is, but the people who over-extended themselves should NOT be receiving any aid. People who did this and the money hungry lenders are the reason we are having the problems we are having.
As to the answer to the question, I vote NO. The people who are causing this probably do NOT 401’s in place, thereby it would be enabling them to make even more bad decisions, as the stable people would be the ones trying to fix the economy. I shouldn’t have to take from my 401k to fix what someone else caused. Sorry, but I already pay enough for those who don’t want to work.
Besides, most people won’t ‘pay down debt, catch up behind payments, do home repair or to make targeted purchases’. They will just buy more junk, go to more casinos, take on more debt. In a month they will have used up all the ‘new’ money and be even worse off later. (Anything you can write into law, you can re-write. If it suits some politician, there’ll be a ‘national emergency’ every 6 months.)