Here's a little pop quiz: which type of retirement account allows you to withdraw money penalty-free to pay your health insurance premiums if you become unemployed, an IRA or a 401(k)? Give yourself a pat on the back if you answered IRA. Turns out, the early withdrawal rules are a little different for the two major types of retirement accounts. You'd owe a 10% penalty if you took out money for health insurance premiums from your 401(k)--or for a down payment on your first home--but not from your IRA. Now, you might think this is a distinction without a difference, since you shouldn't touch your retirement savings before you're retired. That's generally true. But if you find yourself in a tough spot and need some cash, it pays to understand your options. Learn more about the difference between 401(k)s and IRAs in today's edition.
Best wishes,
Elizabeth
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READER INSIGHTS
Health insurance is a perennial topic of interest in our Retire with Money Facebook group. Members recently discussed short-term health plans. Some people use these plans as a bridge to Medicare at age 65. But they're not comprehensive health insurance. Please understand these plans' limitations if you sign up for one.
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About Elizabeth
Elizabeth O'Brien is a senior writer at MONEY, covering retirement and health care. You can email her at elizabeth.o'brien@moneymail.com and follow her on Twitter at @elizobrien.
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Here's a little pop quiz: which type of retirement account allows you to withdraw money penalty-free to pay your health insurance premiums if you become unemployed, an IRA or a 401(k)? Give yourself a pat on the back if you answered IRA. Turns out, the early withdrawal rules are a little different for the two major types of retirement accounts. You'd owe a 10% penalty if you took out money for health insurance premiums from your 401(k)--or for a down payment on your first home--but not from your IRA. Now, you might think this is a distinction without a difference, since you shouldn't touch your retirement savings before you're retired. That's generally true. But if you find yourself in a tough spot and need some cash, it pays to understand your options. 
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