National Pension System: How much can you withdraw from NPS in an emergency? Understand the entire process in simple language..

The National Pension System (NPS) is generally considered a retirement savings plan. People invest in it for the long term to ensure a regular income in old age. However, few people know that if needed, some funds can be withdrawn from this account in case of an emergency. However, certain rules must be followed for this. Let's learn more about this:

When is withdrawal allowed?
First, understand that partial withdrawal from NPS is possible only if you have made regular contributions for at least three years. If your account is less than three years old, withdrawal is not allowed even in an emergency. This means a minimum of three years of investment is required.

Under what circumstances can you withdraw money?
Withdrawal from NPS is only permitted under certain circumstances. These include treatment for a serious illness. This treatment can be for yourself, your spouse, your children, or your dependent parents.

Additionally, funds can be withdrawn from the account for children's higher education, their marriage, or for purchasing or building their first home. Keep in mind that the reason for withdrawal must be valid.

How much can be withdrawn in an emergency?

NPS has a limit on emergency withdrawals. According to the rules, you can withdraw a maximum of 25 percent of your total contribution. This does not include any contributions made by your employer.

The good thing is that this withdrawal is completely tax-free. Upon approval, the funds are transferred directly to your bank account.

How to Apply?
If you need money, you must apply through the relevant Point of Presence (POP), nodal office, or official online portal. You must submit the necessary documents related to the expense along with the application.

For example, you may need to provide hospital bills for medical expenses, admission papers for studies, or a copy of the agreement for purchasing a home. The withdrawal process only proceeds if the documents are in order.

How many times can you withdraw money?
An important rule is that you can only make emergency withdrawals from your NPS account three times. Each withdrawal limit is 25 percent of your contribution.

So, instead of thinking of NPS as just a retirement plan, you can also consider it as a plan that can provide some relief in times of need. The only condition is that you understand and follow the rules correctly.

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