Need coronavirus cash relief now? How your 401(k) can help
Stimulus checks won't arrive for three weeks, the White House estimates
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As the federal government prepares to send relief checks to American households who are hurting financially as a result of measures taken to stem the spread of coronavirus in the U.S., many are wondering when the cash will arrive.
Treasury Secretary Steven Mnuchin said on Friday that people can expect to receive their checks in three weeks, on April 17, which is when the direct deposits will go into people’s accounts. It is believed that a check in the mail could take a bit longer.
But there is a way to get money even sooner – in fact it could be available immediately after the president signs the stimulus bill, which is expected to happen on Friday.
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A provision in the legislation relaxes rules on withdrawing money from 401(k) accounts, allowing people to take up to $100,000 from that retirement stash without being subject to the 10 percent penalty – so long as the funds are used for coronavirus-related financial needs. Individuals will, however, have to pay income taxes on the money.
An acceptable use of the funds, for example, would be for a furloughed worker to put it toward his or her mortgage payments.
Typically, if an individual drew on these funds before the age of 59.5 he or she would be subject to the 10 percent penalty.
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Experts, however, are cautioning against using this option, if possible. Jeff Schneble, CEO of Human Interest, said it could eventually compromise the ability for people to retire down the line – especially considering people would essentially be selling at a time when the market is near a low point in valuation.
Mnuchin on Friday called the relief package the largest in history. It also includes significant increases to unemployment insurance and a number of other measures designed to help small businesses.
More details about the stimulus checks are available here.
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FOX Business’ Edward Lawrence contributed to this report.