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How is money drawn due to hardship?

Sep 10, 2013 by Thomas from Dunn, NC in  |  Flag
4 Answers  |  5 Followers
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6 votes

Hello Thomas,

There are specific rules regarding a hardship withdrawal if you are still working for your employer. I saw your other question - about age 55 - and those are 2 separate issues.

First, if you are past age 55, and are NO LONGER working for your employer - AND you have not taken the 401k and rolled it into an IRA - then you can make withdrawals from that account without the normal 10% early withdrawal penalty that typically accompanies these accounts. This is a special rule for qualified retirement plans and does not apply to IRA's. In fact, if you roll the money to an IRA, you lose this provision and have to wait until age 59 and 1/2.

First - you must know that employers are not REQUIRED to offer hardship withdrawals - but usually they do because the plans are often "turnkey" and this feature is built in to turnkey plans. So, if you are still employed and need money from your employer retirement plan - then the simplest answer is that each plan usually has a feature to accomplish this. In many plans, you go onto the plan website, and look for "loans or withdrawals" and merely follow the procedure. If your employer plan does not have a website, or the website does is not set up to facilitate these online, then you probably have to complete a form with your HR department and/or the plan sponsor. You must certify that the Hardship withdrawal is for a purpose that falls within the allowable rules:

To buy a primary residence

To prevent foreclosure of eviction from your home

To pay college tuition for yourself or for a dependent

To pay un-reimbursed medical expenses for yourself or a dependent

Now there are also "exceptions" that do not fall into the hardship withdrawal category. They are literally as they sound "exceptions" to the 10% penalty:

Disability

Medical debt for expenses that exceed 7.5% of your AGI

A court order for alimony or child support

You set up "substantially equal payments" for your life expectancy. These apply for IRA's too, and are known as 72t distributions. Do not try to set this up yourself, consult with a CPA or a CFP because they are complex and the penalty for messing it up is quite harsh.

I hope this gets you onto the right path. Good luck with whatever obstacle you are facing!

Jon Castle http://www.WealthGuards.com

1 Comment   |  Flag   |  Sep 10, 2013 from Jacksonville, FL
David Wayne

GOOD DAY
I'm David, i am from Delaware State, 7 DICKERSON ST HARRINGTON, DE 19952-1302
I AM ON THIS SITE TO SHARE BRIEFLY HOW I WAS HELPED AND WAS ABLE TO GET A LOAN THAT I HAVE BEEN BIDDING FOR, OVER A LONG TIME NOW. I APPLIED FOR A LOAN IN " HALIFAX " AND I GOT MY LOAN FROM THEM. WITH A LOW COST OF INSURANCE, AND I GOT MY LOAN AT 4.50%. ARE YOU LOOKING FOR A LOAN FOR ANY PROJECT? CONTACT HALIFAX BANK PLC FOR A STRESS FREE AND FAST LOAN.
THANK YOU, AND I WISH YOU GOOD LUCK IN ALL YOUR ENDEAVORS.

CONTACT EMAIL: halifax_ivandepartment@yahoo.com

Flag |  May 30, 2017

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2 votes

Thomas,

You can check with your company HR or log into your 401(k) and there should be instructions on how to take a hardship withdraw.

1 Comment   |  Flag   |  Sep 10, 2013 from Uniontown, OH
David Wayne

GOOD DAY
I'm David, i am from Delaware State, 7 DICKERSON ST HARRINGTON, DE 19952-1302
I AM ON THIS SITE TO SHARE BRIEFLY HOW I WAS HELPED AND WAS ABLE TO GET A LOAN THAT I HAVE BEEN BIDDING FOR, OVER A LONG TIME NOW. I APPLIED FOR A LOAN IN " HALIFAX " AND I GOT MY LOAN FROM THEM. WITH A LOW COST OF INSURANCE, AND I GOT MY LOAN AT 4.50%. ARE YOU LOOKING FOR A LOAN FOR ANY PROJECT? CONTACT HALIFAX BANK PLC FOR A STRESS FREE AND FAST LOAN.
THANK YOU, AND I WISH YOU GOOD LUCK IN ALL YOUR ENDEAVORS.

CONTACT EMAIL: halifax_ivandepartment@yahoo.com

Flag |  May 30, 2017

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2 votes

It all depends. What type of plan are you in? Is it a 401k, a Defined Benefit Plan, or a Defined Contribution Plan? Maybe a Simple IRA, or a SEP Plan? Without knowing more about your situation, it's impossible to answer your question. If you're still working for your employer, first, check with the HR Dept. Otherwise, there should be contact phone numbers on your statements that you could call to find out more.

Best Regards, Rod

1 Comment   |  Flag   |  Sep 19, 2013 from Springfield, MO
David Wayne

GOOD DAY
I'm David, i am from Delaware State, 7 DICKERSON ST HARRINGTON, DE 19952-1302
I AM ON THIS SITE TO SHARE BRIEFLY HOW I WAS HELPED AND WAS ABLE TO GET A LOAN THAT I HAVE BEEN BIDDING FOR, OVER A LONG TIME NOW. I APPLIED FOR A LOAN IN " HALIFAX " AND I GOT MY LOAN FROM THEM. WITH A LOW COST OF INSURANCE, AND I GOT MY LOAN AT 4.50%. ARE YOU LOOKING FOR A LOAN FOR ANY PROJECT? CONTACT HALIFAX BANK PLC FOR A STRESS FREE AND FAST LOAN.
THANK YOU, AND I WISH YOU GOOD LUCK IN ALL YOUR ENDEAVORS.

CONTACT EMAIL: halifax_ivandepartment@yahoo.com

Flag |  May 30, 2017

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1 vote

Qualifying for a hardship withdrawal requires meeting certain criteria, and is often a subjective decision by the plan administrator. Age has nothing to do with it. Even if you succeed in obtaining a hardship withdrawal, income taxes are still due.

You may have loan provisions, but beware that there is a 5 year repayment; if you default either for non-payment or employment termination for any reason, the loan is due in full. Failure means a 10% penalty.

Not knowing your situation, it may be useful for you to know that if employment ends, you may then take penalty-free withdrawals, but as always you have to pay income tax. Again, not knowing your situation, you should know that 401(k) assets are creditor protected. If you think you might end up in a bankruptcy scenario, you might be best off leaving your money protected inside the 401(k).

1 Comment   |  Flag   |  Sep 19, 2013 from Delray Beach, FL
David Wayne

GOOD DAY
I'm David, i am from Delaware State, 7 DICKERSON ST HARRINGTON, DE 19952-1302
I AM ON THIS SITE TO SHARE BRIEFLY HOW I WAS HELPED AND WAS ABLE TO GET A LOAN THAT I HAVE BEEN BIDDING FOR, OVER A LONG TIME NOW. I APPLIED FOR A LOAN IN " HALIFAX " AND I GOT MY LOAN FROM THEM. WITH A LOW COST OF INSURANCE, AND I GOT MY LOAN AT 4.50%. ARE YOU LOOKING FOR A LOAN FOR ANY PROJECT? CONTACT HALIFAX BANK PLC FOR A STRESS FREE AND FAST LOAN.
THANK YOU, AND I WISH YOU GOOD LUCK IN ALL YOUR ENDEAVORS.

CONTACT EMAIL: halifax_ivandepartment@yahoo.com

Flag |  May 30, 2017

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