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Using Retirement Savings to Pay Down Loans

December 6, 2019
 
 

Senator Rand Paul, a Republican from Kentucky, is proposing that Americans be able to use retirement funds to pay off student loan debt.

The Higher Education Loan Payment and Enhanced Retirement, or HELPER, Act, would let people take up to $5,250 from a 401(k) or IRA plan to pay off student loans, as well as pay tuition and expenses for a spouse or dependent, according to a news release.

The withdrawals would be tax- and penalty-free under Paul's plan.

It would also let employer-sponsored student loan and tuition payment plans be tax-free for up to $5,250, and let 401(k)s count as a Roth contribution, meaning the taxes would be paid initially and not be deducted upon retirement.

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