The coronavirus outbreak and the changes it’s brought in how we do work and life at home has brought countless questions. While we can’t settle all your uncertainty, North Star is here to help as a steady resource for all your financial questions in the midst of our current crisis.
You should only consider reducing your contribution if you need that money for groceries, rent or other essentials for your family. This is the time to consider increasing contributions as prices have gone down because of COVID-19. Assuming the social distancing will end at some point, share prices should recover as they often do with recessions and market corrections.
It would be best to consult with a financial professional for the best options given your personal situation. One option would be to roll the funds to an IRA and take out only the portion you need at the time of the withdrawal. The full amount of any withdrawal would be taxable—if it’s pre-tax and not Roth 401(k)—but the 10% premature distribution penalty has been waived for 2020.
Your other options are to cash it out, leave it where it's currently at or when you do obtain a new job, roll it over to the new employer plan.
A loan against your funds could be a solution versus taking a withdrawal since the funds wouldn’t be taxed and you would pay them back. If other funds are available other than your 401(k), there may be better options; but once again, a financial professional would be best to give that advice given your personal situation.
It is not recommended to cancel your policy. Getting a new one may not be easy if your health has changed, pricing will likely be higher and you may lose any discounts you might have locked in from your original purchase. If cash flow is a challenge, you have alternatives for helping with premium payments. As always, it’s best to discuss alternatives with your financial representative.
Before you cancel, consider two changes being made due to COVID-19:
Yes, if you have a confirmed case of the COVID-19 virus claims will be paid out like any other sickness or illness after the elimination period and meeting the definitions of disability or partial disability in your policy. However, being quarantined, furloughed or having hours cut is not in itself a disability
Many of your financial questions at this time can’t be answered in one article online. Your specific concerns are based on your situation, your family, your financial priorities and your experience during these unprecedented times.
Working one-on-one with a financial professional is the best way to get the financial recommendations you need when life gets chaotic and decisions need to be made. If you haven’t connected with a representative yet, we encourage you to find one who fits your family’s financial interests and who is willing to meet virtually during this time.
You can use our Find an Associate tool to connect with one of our 170 financial professionals for a free, no-obligation initial conversation. They are ready to help with answers and insights specific to YOU.