If depleting your 401K while unemployed , any hardship criteria to offset taxes and penalties for early WD ?
nikkisdaddyo2000 asked:
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?
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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?
January 31st, 2009 at 10:03 pm
No.
“Hardship” allows you to access the money but you still have to pay taxes and the 10% penalty.
February 4th, 2009 at 12:01 am
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.
February 5th, 2009 at 12:04 pm
No, sorry, no breaks on the tax or the 10% penalty.
Good luck.