The new Corona virus stimulus packet will allow Americans to withdraw from their 401k penalty free and here is why you shouldn’t do that to pay off loans or credit cards. The $2 trillion stimulus package, also known as the Corona Aid, Relief and Economic Security Act (CARES ACT), aims to delay federal student loan payments and send a $1,200 relief check to many Americans. Now it may sound tempting if the Corona virus pandemic puts you in a financial bind, but Thomas Nitzsche, a financial educator at Money Management International, Inc. does not recommend tapping into your retirement savings early to pay off credit card even if it is penalty free. This packet relieves many Americans of the penalty fee when withdrawing from their 401(k), however, there are still taxes that will be applied also this will only set your retirement back plus early withdrawals tend to negatively impact your tax return. Best case scenario you should reach out to your specific creditors to inquire about a financial hardship plans or participating in debt management plans  through a credit counselor.

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