If depleting your 401K while unemployed , any hardship criteria to offset taxes and penalties for early WD ?
Posted by Dolores
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?
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November 30th, 2009 at 5:48 pm
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no
December 3rd, 2009 at 12:06 pm
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No.
Hardship allows you to access the money but you still have to pay taxes and the 10% penalty.
December 4th, 2009 at 12:32 am
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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.
December 4th, 2009 at 3:28 pm
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No, sorry, no breaks on the tax or the 10% penalty.
Good luck.