Hey, some of you out there may be struggling right now. Just think about all that we’ve been through and all we’ve been hit with in the past five years. Covid, some people were laid off during Covid and then hired back, or they changed jobs or maybe they left a job and started their own company and that caused a loss of a lot of income that was coming in. Shortly after that, we went through a period of rampant inflation where it went up to even a reported 8.7% one year, and that hit people’s finances like crazy. Then we had 2022 where the market itself, if you were invested in the market or your 401k, you were down 22%, and even this year we’ve been hit by the attempt to set up tariffs and to try to balance what was going on economically in the entire world.

And so man, sometimes you might feel like you’ve just been hit time and time and time again. I’ll tell you what we are seeing in the people that we see at Mosley Wealth Management. We are seeing more people come in and they’re saying several things. Number one, their credit card balances have gone up. Number two, they’re saying the savings that they had in the bank has diminished, and that’s an impact of all these things that have happened, because you’re still basically making the same income, but you’re having to spend and have more. We’re also finding that a lot of people are borrowing from their future retirement plans, and that means your 401Ks, your 403Bs. People are borrowing from their IRAs just to make ends meet. If you’re sitting at home and you’re struggling with some of those things, what I want to do today is show you some ways that if you’re under 59 and a half, you may be able to access some of the money from your retirement plans and IRA’s without paying a 10% penalty.

I mean come on; covid layoffs, downturns in the market, inflation tariffs and all these things, and now you have to pay a 10% penalty to get to your money? Yeah, I want to try to help you today show you how you might be able to tap into some of that retirement money without paying a 10% penalty. Now, the first thing I want to talk about is how to define what plans are. I mentioned them just a minute ago. Plans are your 401k, your 403B, your 457. Those savings are through an employer, those are plans. Then the individual plans that I’m talking about in particular today, because there’s some special rules and you’ll need to call in, talk to us on the phone if you have a SEP IRA or a Simple IRA because quite honestly, those things are just too complicated to discuss in a quick video or blog post, but I’m talking about individual retirement accounts, IRAs, regular IRAs, and we’re trying to get you to avoid any penalties, so I’m going to give you a list of exceptions that allow you to potentially withdraw money out without the penalty in both plans and the individual IRAs.

Number one, (I’ve got a whole list over here. You ready?) Number one is death. If there is a death and somebody in your family passes away and they leave you an IRA, you can access the money that’s in that IRA, whether they were 59 and a half, you were 59 and a half, you’re going to have to pay tax on it, but you are going to be able to access that without a penalty. Number two is disability. If you get to a point where you’ve been declared disabled and you’re not able to work, you can under the right kind of circumstances, access money if you’re under 59 and a half out of your IRA or your plans without a 10% penalty. Number three, there’s this crazy thing called a 72 T, and that means that if you’re 55 years of age or older and you want to go ahead and retire, you can take substantially equal payments even if you’re 55, yes, you’re under 59 and a half without paying a penalty.

They’re a little complicated. I don’t necessarily recommend them just like I don’t necessarily recommend taking money out of your IRA or your 401k, but some of you are in a position where you’ve got to do it right now. If you’ve got to do it right now, a 72 T might be the answer. Call us. We can tell you all the details. Number four, some of you may have run into excessive medical expenses, and by excessive I mean it’s going to amount to more than 7.5% of your adjusted gross income. You can take money out of plans and IRAs for paying for that without a penalty. Number five, you don’t want this one, but if you’ve had an IRS levied against you for money that you owe from the past, you can take money out of IRAs and plans to pay for that. Number six, if you are an active reservist, you get called up to serve and you’re an Army Reserve, Navy Reserve, whatever it is, you may be able to access money out of your plans or your IRA to pay and get yourself through.

Now, we want to get to some specific things here, both plans and IRAs. If you adopt a child or you have a natural birth of a child, you can take up to $5,000 without a penalty. All right? Number eight, if you’ve been declared terminally ill and wow, this is the biggest exception I’ve seen as far as amount of time. If you’ve been declared that you’ve got something that within seven years you’re going to pass away under 59 and a half, you can access money out of your plans and your IRA without a penalty, so a terminal illness is not something you want to have, but if it does, you know. Another thing, and it’s a big thing in our LA area, in our southern California area where our main offices are, if you are in a federally declared disaster area, you can take up to $22,000.

You’ve got to make sure you live there. It’s not like hand grenade and horseshoes and nuclear war. You can’t live close to those areas. You’ve got to live in the zip codes where those areas have been declared. You can get 22,000. If you’ve been the victim of domestic abuse many times in a domestic abuse situation, you must move out. You have to get your own living quarters and things like that. You can access up to $10,000 without a penalty, and the last one I’ll list is if you just flat out have an emergency and you’re under 59 and a half. It’s not much, but it’s $1,000, and a lot of times that will literally put food on the table, put gas in the gas tank, and you can get that. Remember, everything we’ve listed so far can come out of a plan, a 401k, a 403B, a 457, if you’re under 59 and a half without a penalty.

Make sure you’re doing this with some help, so you don’t step out of bounds. Now we’re moving into a whole new segment. We’re talking about money that can come only out of an IRA, not a 401k, 403B, 457, a business plan or company plan, only an IRA. Number one for higher education, not for daycare, not for private school, not for somebody in the first through the 12th grade or kindergarten, it has to be higher education. You may be able to tap into it to pay for college. Number two, if you are a first time home buyer, pretty self-explanatory. You say, “well, it’s my first time in this state or my first time in this marriage.” Nope, you have to be a first-time home buyer. You can tap into some of the money out of your IRA for a down payment. Third thing for just IRAs is if you are unemployed and you need to pay for health insurance to bridge you over until your next job or until you get to the point of retirement or Medicare, if you’re unemployed, you can tap into an IRA to get money to help pay for your healthcare and your health insurance.

The final segment I want to deal with is a segment that you can get money out of your plan, but not your IRA. So let’s be really clear on this, okay? You can get money from the 401k, 403B, 457, but not the IRAs, and this gets a little muddy, alright? If you’ve retired and you’re no longer working at that company and you’re over 55, you can withdraw money without a penalty from your 401k or your 403B or your 457. A second thing is, and this is a little particular person out there, this is like the needle in the haystack. If you are a public safety employee, that means you are a policeman, fireman, something to do with a first responder and you’re in public safety and you’re at least 50 years of age, or you’ve been in 25 years of service in public safety. You can get money out of your plan before 59 and a half without a penalty, a 457, that’s just a deferred comp plan that you might have as a public employee. You can get money out of the 457 before 59 and a half. If you have gone through a divorce and you have a Quadro, a qualified domestic relations order from a judge or a court, that money can come out without a penalty even if you’re under 59 and a half. If you are a federal employee, there are federal employee plans like the post office has a particular plan and other segments, the military has a particular plan. You can get money out of those plans before 59 and a half without a penalty. And the last thing is if you’ve got a 401k and its pension linked, and this has got to be real specific here as well, you can get as much as $2,500 out of a 401k under 59 and a half if you’ve also got a pension and that 401k has a specific plan option in it called a pension link, then you might be able to get $2,500 out of that.

One more thing, I’m going to delve into the future here all the way to the end of 2025 in December. There’s already a law in place that’s starting in December of 2025, you’re going to be able to take money out of qualified plans (that’s 401Ks, IRAs and those kinds of things) to help pay for a long-term care policy. It’s not good for most of this year, but by the end of this year, that will be how many are able to access money to pay for a long-term care policy. We’ve named 20 already. That’s the 21st option. If you you’re really struggling right now and you’re going through some things and you thing you might qualify for one of these exemptions, I really would recommend that you give us a call and you let us help you and hold your hand so you do it right, because the one thing you don’t want to do is be really close to doing correctly and then step out of bounds and get taxed on it and have a penalty on it when you file your income tax next year.

We want you to survive whatever you’re going through and if you’re going through any of these things, give us a call. We’ll help you get through these things. Hey, I hope this was helpful. If you want to see more about how we help our clients, go to our website, www.mosleywealthmanagement.com. That’s M-O-S-L-E-Y wealth management.com, And if you want more information about what we’ve talked about today, check out our YouTube page for more in-depth videos. Thanks and have a great week!