As part of the CARE Law, Congress approved a change allowing people to withdraw up to $ 100,000 from their 401 (k) or IRA accounts this year without having to pay typical penalty 10% for people under the age of 59½. This move was designed to help people survive the economic consequences of the Covid-19 crisis, Clayton’s intention told CNBC that he is “very” supportive.
“What I don’t support is that people do something like this, not to bridge the gap or difficulty, but to switch to another investment strategy that does not meet their long-term interests,” Clayton said in an interview with Squawk. Street.”
People who use unpunished withdrawals will still have to pay taxes on money, but these taxes can be paid over a three-year period.
“What I am saying to the financial community:“ Listen, people must draw these conclusions in order to survive the difficult time, we must help them in this. But we should not use this lack of punishment to put them in investments that do not suit them, ”added Clayton.
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The Clayton Agency regulates securities in the United States in an effort to maintain the market and protect investors. according to his website,
The outbreak of coronavirus has led to serious economic consequences that have left millions of Americans unemployed in addition to serious health consequences. But the pandemic also made it possible for new people, especially young people, to start investing in stocks.
Clayton said investing is a great way to build financial stability, which is so important in times of economic pressure, such as the Covid-19 crisis. But he said new retail investors should also understand the risks associated with stock markets.
“Our favorite type of retail investor is your long-term retail investor who, over time, invests in his wealth. There is a risk of being a short-term market participant, and it makes me nervous, ”he said. “People may well do it. We let them do it. But just remember that there is a risk in short-term market movements. ”