401k Hardship?
Q. Hi, I am muslim and i am contributing into my 401k. But i recently discovered that all my mutual funds in 401k have some kind of dealing with interest. so therefore i cant have that money or contirbut in 401k.This is serious Relegious issue. I am thinking to take that moeny out by hardship and put into mutual funds that are design for muslime. Is it possiable to do that or i am open to any suggestion.
Asked by entrepreneur - Tue Mar 27 22:35:35 2007 - - 1 Answers - 0 Comments

A. Well, there's good and bad news. Bad news first. You can't take a hardship withdrawal to put the money in another plan, ever. Hardship withdrawals are only allowed for 6 reasons outlined by the IRS: 1. purchase of a principal residence 2. avoiding eviction or foreclosure of your home 3. medical expenses 4. post-secondary tuition expenses 5. repair of catostrophic damage to your principal residence 6. funeral or burial expenses for an immediate family member, and it is actually up to your employer to accept the last two reasons. And even in that situation, it's only a withdrawal of your contributions, without earnings. The bottom line is that there is money in your account that you won't be able to take out until you stop working for… [cont.]
Answered by stevejensen - Tue Mar 27 23:36:07 2007

Does the weatherization energy credit reduce the amount of a 401k hardship withdrawal penalty?
Q. Made a 10k 401k w/d this year. Thinking of putting in new patio doors. Should I consider making that transaction before the end of this year?
Asked by coco_potomac - Sun Dec 27 19:09:28 2009 - - 1 Answers - 0 Comments

A. No. The penalty still applies. So does the tax credit, if you qualify.
Answered by William - Sun Dec 27 19:22:00 2009

If depleting your 401K while unemployed , any hardship criteria to offset taxes and penalties for early WD ?
Q. 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?
Asked by nikkisdaddyo2000 - Wed Oct 10 12:31:47 2007 - - 4 Answers - 0 Comments

A. 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… [cont.]
Answered by MukatA - Wed Oct 10 13:04:55 2007

How long does it take T. Rowe Price to overnight my 401k Hardship Withdrawal check?
Q. I'm sending it to them today for tmrw delivery. Also, why won't they wire transfer? It's for $6k total.
Asked by ohsogirly - Thu Nov 2 08:55:17 2006 - - 1 Answers - 0 Comments

A. They never wire transfer because of the fees. It should be to you in a few days.
Answered by Mike B - Thu Nov 2 15:50:43 2006

can i withdrawal my 401k on a hardship to buy a home ? i have a single wide home .want to get double wide?
Q. we read where you can take a hardship out on a 401k withdrawal but was wondering if we can avoid alot of the 20% plus taxing that they take out. we are in the process of getting a doulbe-wide mobile home. and a good down payment would be help full from the 401k . any help or info?
Asked by paavine - Sat Oct 11 10:55:14 2008 - - 4 Answers - 0 Comments

A. Buying a home does not qualify for a hardship withdrawal.
Answered by bud68 - Sat Oct 11 11:06:18 2008

401k hardship withdrawal question?
Q. Let's say I withdraw 10k from my 401k plan to pay for medical expenses and I ended up using only 8k. What should I do with the left over amount? Does the IRS want you to place the unused amount back in your plan? Also, besides the 10% penalty, is there any other penalty at tax time? Thanks for your help.
Asked by william k - Wed Sep 13 13:36:25 2006 - - 6 Answers - 0 Comments

A. You have to claim what you take out as ordinary income + pay the penalty. In addition, when you take the $10k out, the holder of the 401K will take 20% off the top for taxes, so you will only receive $8k, so if you want to replace $2k, you will have to do so with "fresh money". If you pay it all back before the end of the fiscal year (dec 31), then you will not have to have any penalty - it's a rarely used piece of the tax law. A better avenue is to take a "loan" on your 401k, because then they don't do the tax hit, and you only have to take out what you need, and you can pay it back over a 5 or 10 year period, depending on the need. The only "excess distribution" would be if you defaulted on that loan.
Answered by girlwhoknowsitstrue - Wed Sep 13 13:41:37 2006

When taken funds out of a 401K is unemployment considered a hardship?
Q. I lost my job 2 months ago. I went to the Family Independence Agency and they said they couldn't help me because I have too much in assets (over 3,000.00). So basically I need to take the money out of my 401k and then spend it to survive until it runs out so I can get assistance, but when I go to get the forms from the 401k company unemployment isn't listed as a hardship in order to not pay the 10% penalty (on top of the 20% given to taxes. I don't mind the taxes because I might get that back next year at tax time but why can someone buying a house get a break on the penalty where someone trying to save his house doesn't? Sorry that should actually be "When TAKING funds..."
Asked by parkdad73 - Thu Mar 1 11:36:54 2007 - - 3 Answers - 0 Comments

A. The only hardship that you can remove funds from a 401(k) plan without paying the 10% penalty tax is to either pay medical expenses that exceed 7.5% of your AGI or if you become totally and permanently disabled. Your situation, unfortunately, does not qualify for exclusion from the10% penalty tax. Someone buying a home CANNOT remove funds from a 401(k) without paying the penalty tax. That option is available for distributions from an IRA, but not from a 401(k). You should check and see if retirement fund accounts are exempt from consideration as resources available for your support. Bank deposits are counted, of course, but retirement funds may be exempt.
Answered by Bostonian In MO - Thu Mar 1 11:44:12 2007

help me figure out how to pay taxes on my 401k hardship loan plz?
Q. I got a hard ship loan from my 401k that I dont have to payback but opted not to pay taxes on till tax time I am not really sure where to enter it under income & wages Plz help Remember this is not a loan Sorry for the typo this was not a loan at all it was just a hardship but I do need to pay taxes on it and it will be considered as income
Asked by caring father - Fri Jan 22 12:47:24 2010 - - 3 Answers - 0 Comments

401K Hardship Rules and Penalties?
Q. I just had to quit my job unexpectedly. I want to cash my 401K in so I can pay my rent! This acct is from a previous job I had a few years ago. It has about $4000 in it. I am not sure what the penalties and guidelines are for a hardship loan/withdrawl? I need the $ quickly.
Asked by MMAARREE - Wed Aug 15 09:02:45 2007 - - 4 Answers - 0 Comments

A. First, you have to prove and document your hardship and provide evidence that it can't be cured through other financial means. You will be taxed at ordinary income for all of your withdrawls and also face an additional 10% penalty tax. Generally, hardship distributions from a 401(k) plan are limited to the amount of the employee's elective deferrals only, and do not include any income earned on the deferred amounts. Hardship distributions are not treated as eligible rollover distributions. A distribution may be deemed to be immediate and heavy financial need, if the distribution is for payments necessary to prevent the eviction of the employee from the employee s principal residence or foreclosure on the mortgage on that residence. … [cont.]
Answered by PK - Wed Aug 15 10:36:23 2007

what kind of penalty's and taxes should i expect for cashing my 401k under a hardship clause?
Q. I have roughly 10,000$ in my 401k, i am currently laid off and need the extra money.
Asked by walls8555 - Wed Aug 5 18:29:12 2009 - - 4 Answers - 0 Comments

A. Only you know all your circumstances, age, etc. Call the company that manages the 401K and they can advise you best and give you an exact cost for cashing out.
Answered by TruthB - Wed Aug 5 19:03:53 2009

Hardship withdrawal from 401k for down payment on a home?
Q. I am 36 years old and I have about $50,000 dollars in my 401k. I am interested in buying a friend's house ($110,000), but I don't have the savings for a down payment. I can take a $14,000 hardship withdrawl from my retirement. How would this money be taxed (at what percent and when are the taxes paid?) Could it be offset by first time buyer income tax breaks? Are there other options available that would not require a down payment and keep my retirement intact??
Asked by GgMac - Wed Jan 24 03:48:43 2007 - - 6 Answers - 0 Comments

A. You take a 20% hit up front and get 1099ed as taxable income. All 401ks have the ability to withdrawl up to half of your 401k (up to 50k I believe) for the purchase of a primary residence without a upfront penalty. Talk to your 401k rep at your company. Regards
Answered by satarnag - Wed Jan 24 05:10:31 2007

What is a cost effective way to pull money out of a 401k account without considering a hardship withdrawal?
Q. I do not qualify for hardship withdrawal. I want to use as cash but am worried about the tax hit.
Asked by rsong76 - Mon Nov 12 12:14:50 2007 - - 3 Answers - 0 Comments

A. Not only is there a tax hit but you will pay a 10% penality if you are not 59 1/2. Your 401k is for your retirement. It is not meant to be a savings account. Worse than the taxes and penality you will pay is the fact that you or messing with your retirement. I think the worst rule concerning 401k's is that you have the ability to "borrow" from it. Are there any alternative options available to you besides tapping into your 401k? Please read my profile and send me an email if you think I can be of any further help to you.
Answered by Richard Jackel - Mon Nov 12 12:24:16 2007

401k hardship withdrawal?
Q. What kind of documentation will I have to provide my company with for a 401k hardship withdrawal for medical reasons? If approved, will they send the money to my creditors for me or will I have to do it myself?
Asked by chesirecat834 - Mon Nov 19 15:13:38 2007 - - 4 Answers - 0 Comments

A. The specific answer will be governed by the plans provisions but generally: you will first need to exhaust all traditional loans available to you before applying for a hardship withdrawal. Assuming that you have done that remember that there are commonly only 8 very specific reasons that a hardship will be granted - unpaid medical bills would qualify and you would need to submit that unpaid bill. It is important to note the rules are very specific - so for instance; having a medical bill on a credit card that you can't pay will probably not qualify - most plans will consider this bill "paid" for purposes of the hardship withdrawal. In short you want to build as convincing a case for yourself as you can. The check, in most cases, will… [cont.]
Answered by u - Mon Nov 19 17:14:14 2007

my boyfriend is trying to do a hardship withdraw on his 401k plan due to hardship, is back taxes a hardship? ?
Q. my borfriend is trying to do a hardship withdraw on his 401k because he owes back taxes and the town put a lein on his home. is'nt that considered a hardship because eventually he can lose his home if he does'nt pay his back taxes?
Asked by jmpoct03 - Sat Aug 23 09:53:21 2008 - - 4 Answers - 0 Comments

A. No, this is something he decided he wanted himself. He refused to pay his taxes, there fore they are still due. Hardships are things that happen to you against your will. Major illness (cancer, stroke, etc) are hardships. Being laid off (but not fired) is a hardship. Blowing your money is not a hardship, it is a life style choice.
Answered by Landlord - Sat Aug 23 11:52:46 2008

would i qualify for a 401k hardship withdraw? to buy my house?
Q. I bought my house in 1991 for 22,000 i still owe 20,000. I wanted to pay 12,000 cash and get a hardship withdraw for 8,000 would i qualify? my company rules say: purchase of principal residence: copy of of purchase and sales agreement. including closing costs signed by both seller and purchaser
Asked by Reerre E - Sat Aug 16 11:41:28 2008 - - 2 Answers - 0 Comments

401K Hardship Withdrawal Repayment?
Q. Ok, I have read all over this is a bad idea. But just for curiosity, how does a 401k hardship withdraw get paid back? Is it over a course of a year or two? I know you stop contributing to your plan, but does this money go towards the hardship withdrawal then? My 401k is small (around 7,000), but I can use $4000.00 for hardship. I have some brace work on my teeth coming up that my insurance does not cover. I am young and can build the fund back up after repayment. Just curious as to how long I have to pay it back and is it payroll deducted? I have Fidelity.
Asked by skiairplane - Sat Dec 27 17:06:47 2008 - - 1 Answers - 0 Comments

A. I went to a doctors office once, and I overhead a lady talking about not having the money to get something done. They gave her an application for a company called CareOne( I think). Doctors offices like dentists and plastic surgeons use this. Next time you go to your dentist, ask them if they have a company that financing your braces, you'll be surprised to be handed a credit application. /
Answered by Judy - Sat Dec 27 17:24:15 2008

401k hardship w/d taxed as ordin income. include as ordin income when calculating pension payment?
Q. Good morning I recently withdrew 89,000 from my 401k as a hardship w/d and paid tax as ordinary income plus 10% penalty. Fine. My company offers a pension plan that uses annual income to calculate payments. Since the 89,000 w/d was counted as ordinary income, I should be able to add it to my income in the current year (60,000 normal annual income) to come up with 149,000 in annual income for pension calculation in 2007. Comments? thank you very much for answers. Due to complexity of this topic, If possible pls cite US tax code or cases supporting your answer
Asked by Steve F - Tue Nov 6 09:38:40 2007 - - 2 Answers - 0 Comments

A. No, just your income from your job, not from the withdrawal, counts toward what you can put in.
Answered by Judy - Tue Nov 6 10:05:30 2007

II became disabled in Oct 2006 and had to draw from my 401K plan to live,How do I get a hardship on those fund
Q. I was not drawing any salary and my long term disability had not started . So we had to use most all of the 401K. I have asked for an extension on filing my income tax but was told I had to have something from the investment firm that held my 401K. I know they did not hold out any penalty or taxes.
Asked by legal beagle - Mon Jul 2 14:39:35 2007 - - 2 Answers - 0 Comments

A. You have to talk to the financial institution so they'll show proper code for distribution. However, you will pay income taxes on distribution anyway. The code(which shows your elegibility to withdraw) will help only to decide whether you will pay 10% penalty on early distribution if you are under 59.5 years old. There are 10 instances you won't pay penalty such as if you used money to make down payment if you were first time home buyer, or in your case, you used it for medical expenses necessary for you to recover. if you choose this, you won't pay penalty, but you will pay income tax.
Answered by alikmal - Tue Jul 3 12:50:52 2007

Do dental bills count as medical expenses for 401k hardship withdrawal?
Q. My husband just got back from the dentist and found out he has about $3000 of work to be done in his mouth that insurance won't cover. Can we withdraw money from his 401k for this? His plan is administered by New York Life and according to the website, hardship distributions are allowed. I am waiting on the proper forms to be sent to us regarding distributions, just wondering if we are wasting our time or not. I already checked about getting a loan and they do not allow that. It's either get the withdrawal or not get all the work done which may result in acute periodontal disease.
Asked by jesswilkins - Tue Oct 28 12:31:21 2008 - - 5 Answers - 0 Comments

A. Yes, it qualifies as medical expenses for this purpose, but you don't avoid the 10% penalty or the regular income tax with a hardship withdrawal. You simply get access to the money. You may wish to explore other sources of loans. Your costs for the hardship withdrawal could be a lot higher than for the interest on the loan. Here is one more suggestion. Ask your husband's employer if they offer a flexible spending account for medical expenses. This allows your husband to spread the $3,000 expense over a full year. The employer will take a portion from each of your husband's paychecks, but you can spend the money you need to on the dental work immediately after January 1, 2009. You don't have to wait until the funds are deducted from… [cont.]
Answered by doreen k - Tue Oct 28 14:46:20 2008

401k QDRO split and hardship withdrawal?
Q. Hello. My wife and I are going through a divorce. If we have a qualified domestic relations order (QDRO) and my 401k is split or given as part of the divorce settlement, can I or my exwife (tobe) take money out under hardship withdrwal to purchase a house after the divorce? I wanted to know if either of us can give up the current house we have, the other may be be able to buy a house using the 401k funds. Any help appreciated.
Asked by lucky0505 - Sun Nov 29 16:56:08 2009 - - 2 Answers - 0 Comments

A. i believe a hardship withdrawal is only to save a house you own,not to puchase another. a QDRO withdrawal is court ordered,a completly differant senerio.
Answered by maine guy - Sun Nov 29 17:31:18 2009