Hardship withdrawal difficult from 401K

[Administrator]

2 Comments, last updated on Friday Oct 24 by GOODY

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(Source: Topxi.com)

[josh decore]

401k hardship withdrawals are allowed only under very specific circumstances. There are some withdrawal rules:

– You can’t take a hardship withdrawal in anticipation of some emergency 9 months down the line.
– You must have no other funds available to fulfill the need. It must truly be your last resort.
– If an emergency medical procedure costs $4,000, for example, you are only allowed to withdraw $4,000. Any amount over that will be subject to penalty.
– If your plan administrator allows borrowing against your 401k (which is bad idea), for example, you must have exhausted that line of credit before being eligible for a hardship withdrawal.
– I suppose Uncle Sam believes if you can afford to start contributing again so soon, you didn’t really need the hardship withdrawal to begin with.