401K Hardship Withdraw
The 401k--what an idea! All that money just waiting for you in your golden years, your money. But to grab that 401k hardship withdraw is a different matter. If you’re still working for the employer that’s responsible for your 401k plan, and you’re under the age of 59 ½, then there are going to be rules about how and for what you can get your 401k hardship withdraw that you're entitled to.
Naturally, there are many situations that allow for someone with a plan to withdraw funds early due to a hardship that cannot be paid for through any other avenue. To withdraw because of a hardship in life is obviously bittersweet, but I think the glass is really half full with this one.
When Should I use a 401K Hardship Withdraw?
Here are a few legitimate hardships in the eyes of the IRS that will enable you to file for your 401k hardship withdraw:
* Any expenses used for the purchase of a principal residence in the same name as the 401K plan
* Repairs done to the principal residence in some situations
* A payment to prevent eviction or foreclosure of mortgage on a principal residence
* Medical expenses for the person with the plan and his or her dependents, for a necessary medical action
* Money for the next twelve months of tuition and or room and board for post-secondary school for the person with the plan and his or her children and dependents
* Expenses incurred by a death (burial, funeral)
During these difficult life events that most of us experience at one time or another, we can make use of a our 401k plans, earlier than planned. Of course this action is still subject to the ten percent penalty tax, and depending on your tax bracket status, you could end up seeing only seven thousand dollars out of a ten thousand dollar withdraw. Determining how much you really need that 401k hardship withdraw is obviously up to you and no one else.
Check the details in regard to your unique tax situation with a professional tax service like TurboTax Online. They offer specific information on any tax situation as well as a few more interactive services that will get the answers you need.
It is very important to be sure to establish whether your early withdraw is a hardship or non-hardship withdraw because there is a big difference between the two.