Those affected by Katrina will be allowed to withdraw money from their 401(k) plans, free of any penalties. The IRS has decided (and will announce shortly, according to the article) that they are going to allow this. In situations like those that Katrina has wrought upon thousands of people, simple cash or otherwise liquid emergency funds just aren’t enough to allow the victims to fully recover. Allowing easy access to 401(k) funds will certainly help many people through the trying period.

Of course, many of the people affected the worst are poor, and will perhaps not have 401(k)s from which they can withdraw money. Also, you can bet that there will be others taking advantage of the allowance. No solution is ever perfect, but I think this is a very good idea.

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Flexo, the owner and creator of Consumerism Commentary, has been blogging and writing for the internet since 1995 and has been building online communities since 1991. Find out more about him and follow him on Twitter.

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