Dec 6

In order to avoid bankruptcy, during a 9 month period of unemployment, It was necessary to take early distribution monthly from 401K for income. Are there any hardship provisions for this type of “forced” early distribution?


4 comments so far...

  • Aidan Said on December 6th, 2009 at 5:58 pm:

    no

  • Wayne Z Said on December 6th, 2009 at 6:22 pm:

    No.

    “Hardship” allows you to access the money but you still have to pay taxes and the 10% penalty.

  • MukatA Said on December 6th, 2009 at 6:33 pm:

    Early Withdrawal is subject to 10% penalty. Also the withdrawal will be taxed at your normal income tax rate. However, in some case there is no penalty on early withdrawals.
    *If distributions are not more than your qualified higher education expenses,
    *You have unreimbursed medical expenses that are more than 7.5% of your adjusted gross income. The distributions are not more than the cost of your medical insurance.
    *You are disabled.
    *You are the beneficiary of a deceased 401k owner.
    *You are receiving distributions in the form of an annuity.
    *You use the distributions to buy, build, or rebuild a first home.
    *The distribution is due to an IRS levy of the qualified plan.
    *The distribution is a qualified reservist distribution.

  • Judy Said on December 6th, 2009 at 6:47 pm:

    No, sorry, no breaks on the tax or the 10% penalty.

    Good luck.

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