The Downside to Early Withdrawal:
Ways to Avoid Tapping Your Retirement Savings

We’ve all had times when we’ve needed immediate cash, whether for rent, mortgage, utilities, car payments or medical bills. If you’re tight on funds, it can be tempting to make an early withdrawal from your retirement plan savings account.

First, it’s important to know that an early withdrawal from your retirement plan is not always possible. Some plans do not permit distributions of any kind until you reach age 59½, leave employment, become disabled or die.  When they are available, taking early withdrawals from your retirement plan savings account comes with significant tax implications. Withdrawals are subject to income tax at your ordinary income tax rate at the time of withdrawal, and if made prior to age 59½, a 10% federal tax penalty. Also, you could miss out on the opportunity for future investment or interest gains.* Here are some alternatives to an early withdrawal:

• Tap into your emergency fund.
  Consider incorporating an emergency fund into your annual budget for just this reason. Even having a small buffer of cash on hand can help you meet your current needs while safeguarding your savings.

• Reassess your budget.
  Review your budget to identify and eliminate any unnecessary spending. You might be surprised to find out how much you can save by making small changes like cutting recurring subscriptions or reducing takeout meals. You should always strive to continue making regular contributions to your retirement plan.

• Consider a part-time job.
  If you have room in your schedule, consider temporary part-time work, which can help bridge the gap between your income and your expenses.

Learn more about meeting your expenses while protecting your savings by contacting a Mutual of America representative today.

*The performance of the Separate Account investment options is not guaranteed, and any assets allocated to them may decrease or increase in value.