You’ve lost your job, and money is ti𒈔ght. Should you contact your family for help, or tap into your 401(k) retirement plan? There are pros an💮d cons to each money decision.

Dipping Into Your 401(k)

The advantage to getting the money you ne🐎ed out of a 401(k) is it’s your plan, in your name, and you are free to do with it what you wish. No one has to know you are short on cash and tapping your 401(k) retirement plan eaꦏrly to make up the difference.

But there are some pretty serious financial downsides for withdrawing early from a 401(k).

A 澳洲幸运5开奖号码历史查询:401(k) plan is meant for 澳洲幸运5开奖号码历史查询:retirement savings, and you’ll pay a 10% penalty for withdrawing money before the age of 59½. For example, if you withdraw $5,000 from your 401(k), you’ll pay a $500 penalty on your next 澳洲幸运5开奖号码历史查询:tax return plus state and federal taxes—and having a hefty tax bill hanging over your head while you are job searching is not a good place to be.

“It will count as 澳洲幸运5开奖号码历史查询:earned income and, therefore, will be taxed as 澳洲幸运5开奖号码历史查询:ordinary income. Depending on your 澳洲幸运5开奖号码历史查询:tax bracket, that could be quite expensive,” says , a certified financial plan🔜ner with Insight Financial Strategists.

Another downside to raiding your 401(k) is it may be difficult to get back on track with your 澳洲幸运5开奖号码历史查询:retirement savings.

“This is money that you would need in retirement. Perhaps you are even counting on it. People tell themselves that they will return it eventually. That happ𒉰ens rarely,” Chen says.

But if you are lucky enough to get back on your feet fairl✨y quickly, you may be a💧ble to avoid a big tax bill by returning money to your 401(k).

“If you return the money within 60 days, you may avoid these additional taxes,” Chen says.

Reaching Out to Family for Money

Asking a loved one, like a parent or other 澳洲幸运5开奖号码历史查询:family member for financial help is another alternative. This involves sharing the extent of your financial troubles with your family. S𒅌o be honest about how bad your financial circumstances have b🐽ecome.

Also, be clear about how they can help. How much money do you need to get by as you look for a new job? Is the money from a family member a loan? Or are you unsure if you will be able to pay them back? Be tr𒉰uthful about what you can handle financi🦩ally.

Financial help from a family member will be less expensive than withdrawing money fr✅🐽om your 401(k) plan, but there are emotional elements to consider.

“If you don’t pay (the money) bඣack, your family will remember that for a long t🐎ime, whereas the 401(k) has no such emotions,” Chen says.

So, tread carefully when approaching parents or🌠 other fam🎶ily members for help.

“Relationships can get complicated, especially when they add a financial dynamic,” says , a financial planner with Amplify My Wealth. “I recall asking a client how they felt about borrowing money from their parents, with whom th🎉ey had a fantastic relationship. They were confident, too, that their parents would say yes, but they res𒊎ponded that that was not how they wanted their parents to see or think of them. Ideally, borrowing money from your family would be a last resort.”

If your family is able to help, have a plan for repaying their assistance.

“Consider an agreement to pay it back when you gain employment, or if you are in the family member’s estate plan for it to decrease your 澳洲幸运5开奖号码历史查询:inheritance by that amount,” Maizes says.

If f🔜amily members are unable to help financially, th🐼ey may be able to provide an affordable place for you to live for a while.

“With 澳洲幸运5开奖号码历史查询:rent and homeownership often being a peꩵrson’s most significant monthly expense, consider whether temporarily living with your family can help set you up for success in getting your next ideal position,” Maizes says.

The Bottom Line

Choosing between withdrawing money from a 40🤡1(k) and reaching out to family for financial support can be a tough decision.

If a family member is doing well financially, then a few thousand dollars to you may not be much of a hardship, especially if you plan to pay them back once you get a new job. Family members without cash to spare could allow you to live with them for a while eliminating your housing ꦉexpenses for a few 🌠months.

Withdrawing money from a 401(k) plan gives you an immediate injection of cash, but with a 10 percent penalty and federal and state taxes to pay, this is an expensive way to go. To avoid the big tax hit, return the money to your 401(k) plan within 60 days.