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Is it possible to withdrawal from your 401k on the basis of hardship?

asked by Deanna (28)

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Tags:  finance

answers

It is possible but not recommened. Harship withdrawals carry a heavy tax penalty and you must provide documentation for the exact amount that you wish to borrow. Keep in mind that you must pay state taxes too. You must also be approved for a hardship loan. Explore other options first.

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posted by Caryn (24)
7 votes

Yes. As long as you have proof that your need for withdrawal is truly a financial crisis. Although your 401k is in your name, you are still required to pay yourself back plus any early withdrawal penalties that are required by your plan.

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posted by Linda (92)
6 votes

It is possible and it certainly depends on the terms of the 401k. In most cases hardship would be being ill and having to need the money for medical expenses, however, you would need a letter from your doctor and the insurance company to prove your hardship is on the level. Sadly you can not just take the money out.

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posted by reddawg (39)
6 votes

While most 401K plans allow you to withdraw for hardship, there is much documentation required. And the drawback is that it takes a little longer than you would like.

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posted by barbie (113)
5 votes

Yes it is, with any withdrawel will have a substantial tax as well as fees associated with it, check into a loan aganist your 401-k to avoid this.

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posted by Rose (6492)
4 votes

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