Question: This is in regards to a questioner on a recent program (last weekend, I think). She was terminally ill and wanted to know the requirements for early withdrawal from her 401k. My sister is in a similar but slightly different situation, and I wanted to pose the same question for her. Her circumstances are as follows: She is over 59 and a half (just). She has cancer that is expected to be terminal in less than two years, although she is undergoing chemotherapy. She... continues to work at a limited level. She has had to quit her primary income source.... Her income is about 1/5th what it was, and her other financial resources are now all but gone. She has something like $5,000 or so scattered among a few retirement-type accounts -- 401k mostly, but I believe a SEP-IRA as well. Can she withdraw this money without penalty in a lump sum? It would sure help matters. Anonymous. Alexandria, VA.

Answer: I'm sorry that your sister is so sick. On the financial front, since she is over 59 ½ she can withdraw the retirement money at any time without penalty. She'll pay ordinary income taxes on the sums she takes out of the retirement plans, but since her earnings are down the tax hit should be relatively small.

Here's the link to the question and answer on terminal illness from an earlier show:

Follow Chris Farrell at @cfarrellecon