Only $1,000 can escape the penalty.
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You can now withdraw up to $1,000 per year from your retirement account without paying the 10% early withdrawal penalty.
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Emergency Expenses:
This withdrawal is specifically intended for unexpected and immediate financial needs, such as personal or family emergency expenses.
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Repayment:
The money must be repaid into the retirement account within three years. If not, it's treated as a loan and subject to taxes and penalties.
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Self-Certification:
You don't need to provide detailed documentation to justify the withdrawal, but you do need to certify that it's for an emergency.
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Annual Limit:
You can only make one such $1,000 withdrawal per calendar year, unless you repay the first withdrawal within three years.
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Tax Implications:
While the withdrawal is penalty-free, it's still subject to ordinary income tax.
