It's bad enough to tap your 401(k) when you are unemployed. But should you have to pay a 10 percent early distribution penalty too?
Not if a little-known provision buried deep within President Barack Obama's proposed 2016 budget becomes law. The provision would allow those who've received unemployment compensation for more than 26 weeks to withdraw up to $50,000 per year from their IRAs and employer-sponsored retirement plans.
And while experts said the budget is unlikely to pass in its current form, there appears to be bipartisan support for the exemption.
Under the proposal, you would have to withdraw retirement funds either in the year when you received unemployment compensation or the following year.
If you qualify, you can withdraw at least $10,000 from your retirement accounts. If you have more than $10,000 in your retirement accounts, you can withdraw half of your retirement plan balance up to $50,000 penalty-free.