Some Apple employees have become disillusioned with the group's culture, where some have thrived while others feel sidelined.Technologyread more
Biden has shown staying power at the top of a jammed Democratic field even as polling numbers for Sanders, Warren and Harris wax and wane.2020 Electionsread more
The FDIC on Tuesday votes to approve a five-agency revision of the post-crisis regulation known as the Volcker Rule.Financeread more
The yield curve is the only economic indicator pointing to a recession, according to Credit Suisse.Marketsread more
Stocks slipped on Tuesday as investors digested a sharp rebound from a strong sell-off last week.US Marketsread more
With the official launch of the Apple Card, Goldman Sachs has embarked on a multi-decade journey to becoming a leader in consumer banking, CEO David Solomon said.Financeread more
For investors still haunted by last week's monster sell-off, the market's comeback is set to last, according to J.P. Morgan's quant guru.Marketsread more
The move comes as Facebook continues to grapple with its privacy practices and lawmakers' scrutiny over how it uses personal data to display ads. But it will probably won't...Technologyread more
An under-the-radar hedge fund is ruling the industry with a nearly 30% return this year so far, and it's more than doubling its bet on gold.Marketsread more
The Apple Card is more secure because users get a one-time-use number in the Wallet app, says the president of Mastercard's North American operations.Technologyread more
The National Rifle Association is turning to old stock footage of Dana Loesch, their former spokeswoman, to rally supporters in the wake of the recent mass shootings and...Politicsread more
Individual retirement accounts, CDs and other savings options often come with stipulations around when you can pull out your money.
Many people dutifully follow these rules in order not to face the much dreaded early withdrawal penalty. But there are instances in which the penalty might not apply to you, or times when the benefits outweigh the consequences.
Keep in mind: these moves should often only be made if necessary, as they put your savings in jeopardy.
Mark Kantrowitz, a student loan expert, saw his CDs growing at less than 1 percent a year at his bank. Then he noticed another bank was offering annual returns of 1.72 percent on their certificates of deposit. To take an early withdrawal, he knew, would result in a penalty of three months interest. Still, he went ahead.
"The bank teller was shocked that I wanted to close [it] early. She called over the branch manager, who said 'But, but, but you'll have to pay a penalty,'" Kantrowitz said. "I explained that I would be ahead financially after three months at the other bank's higher interest rate."
In the rising interest rate environment in which we find ourselves, it may be particularly advantageous to swallow an early withdrawal penalty from a CD to move your money to a higher yielding destination, said Greg McBride, chief financial analyst at Bankrate.com. "You want to calibrate your penalty with what your upside is," he said.
Make sure you fully understand what you're getting yourself into, he said. For example, if a bank charges a three-month interest penalty for early withdrawals, and you've only had the certificate for two months, they might be able to dig into your principal, he said.
There's no such thing as an early withdrawal from a 529 plan, the tax-advantaged account that can be used for education-related expenses, because there are no rules around when you can use the money — just for what you can use it for: education-related expenses only.
You'll pay a penalty if you use it for other reasons.
If you end up using the money for a new television or a vacation instead of their dorm or textbooks, you'll pay a 10 percent tax penalty as well as income taxes on the account's earnings, said Kantrowitz, the publisher of SavingforCollege.com.
Though, he called that consequence, "negligible. " He calculates it's often around 1 percent to 3 percent of the entire amount. "The family is no worse off than they'd be in a taxable account," Kantrowitz said.
Though, he added, you might have to repay the state income tax benefits you picked up for using the account. And, most important, if your child does plan on going to college, withdrawals will leave your savings less time to compound.
Making an early withdrawal from your retirement account is one of biggest no-no's in personal finance.
After all, tapping an individual retirement account or 401(k) plan before the age of 59½ can result in a 10 percent penalty, income taxes and a depleted fund for your retirement.
But there are ways to lessen that penalty should you really need the money, said Ed Slott, an expert on retirement saving.
"The tax law contains several exceptions to the 10 percent penalty, eliminating that expense when you withdraw early from you retirement account," said Slott, a CPA and president of Ed Slott and Co.
Unfortunately, he said, there's a lot of confusion around when the penalty does and does not apply.
He cited a case in which an accountant withdrew more than $30,000 from his 401(k) plan, after deciding to leave his firm to pursue a PhD. He used the money for his education and his first house.
Because withdrawals from individual retirement accounts are exempt from the 10 percent tax penalty if they're used for education or a first house, the accountant assumed he would be in the clear. Then he received some bad news: 401(k) plans don't make those exceptions.
He took his case to court, where he argued that the difference between an individual retirement account and a 401(k) are merely "a matter of form." Still, he lost, and was stuck paying the penalty.
"It shows that even professionals can mess it up," Slott said.
If the accountant had known the rules, he could have simply rolled his 401(k) into an individual retirement account, and then made his withdrawals without any penalties, Slott said.
In some cases, he added, it'll be your 401(k) that'll give you more freedom.
For instance, say you decide to retire at 56. You can withdraw from your 401(k) without any penalty, but if you roll it into an individual retirement account, you'd have to wait until 59½ to have your money without consequences.
Both 401(k) plans and individual requirements waive the penalty if you're using the money for serious medical expenses, or if there's a disability or death. You can use your individual retirement account to fund health insurance if you're unemployed, without penalty; if you're divorcing, you may be able to tap a 401(k) without consequence.
"See if one of these penalty exceptions can help you gain without the pain," Slott said.
More from Personal Finance
Here's where you can retire nicely on just $30,000 a year
These are the only three times you should pull money from your 401(k)
How a Great Recession hangover could change the way you retire