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chelayna · Feb 23, 2009, 06:56 PM

I thought I read somewhere that you can avoid penalties on early withdrawal of 401k in emergency situations like evictions, is that true?

ScottGem · Feb 23, 2009, 07:16 PM

No. A Plan does not have to permit withdrawals period. However, if they permit only hardship withdrawals one of the permissible reasons is to forestall foreclosure, not evictions. And, even if a hardship withdrawal is permitted the 10% penalty and tax liabilities still apply.

ScottGem · Feb 23, 2009, 08:45 PM

Originally Posted by Thewizard

Haha you could roll it to an IRA and then pull it out with no penalties.

Not necessarily. If the plan doesn't permit withdrawals, they can't take it out to roll it over.

Thewizard · Feb 23, 2009, 08:51 PM

Yes, but if he leaves his job, then instead of rolling it to his new one he can avoid the penalty by IRAing it. Anyhow you right, but I know most plans let you take loans, mine did and its up to half of what you have earned, well it was with Principal 401k's. There are ways to do it, you might not get all your cash unless you leave your job but you can still access it. Do what I did and call the company, they are very helpful.

ebaines · Feb 24, 2009, 08:46 AM

Originally Posted by Thewizard

Yes, but if he leaves his job, then instead of rolling it to his new one he can avoid the penalty by IRAing it.

Not in this case - the exceptions for avoiding the 10% early withdrawal fee on an IRA withdrawal do not include using the money to forestall eviction.

ScottGem · Feb 24, 2009, 10:41 AM

Originally Posted by Thewizard

Yes, but if he leaves his job,

So you think someone should leave their job so they can a distribution that they can roll over? And, as ebaines pointed out, that still wouldn't qualify him for a waiver of the penalty.

Please THINK before you answer questions here. We pride ourselves on the quality of the advice we give.

The advice to seek a loan though, was good.

Thewizard · Feb 24, 2009, 11:16 AM

Scott that is not what I meant, I did not tell him to leave his job. If your going to quote me then do it correctly. I was simply stating that there are ways around the fees and that some people think it is impossible to get their money without paying huge fees, and its not. But OK, since your such an expert on 401k I won't post in this thread.

JudyKayTee · Feb 24, 2009, 11:19 AM

Originally Posted by Thewizard

Haha you could roll it to an IRA and then pull it out with no penalties.

Ha ha - this is not always correct.

ScottGem · Feb 24, 2009, 04:30 PM

Originally Posted by Thewizard

Scott that is not what I meant, I did not tell him to leave his job. If your going to quote me then do it correctly. I was simply stating that there are ways around the fees and that some people think it is impossible to get their money without paying huge fees, and its not. But ok, since your such an expert on 401k I wont post in this thread.

No you didn't directly tell him to leave his job, but youy did say that's a way to avoid the penalty. So you advocated leaving a job to avoid the penalty. That may not be what you meant, but that is the way it came out. That's what I meant by you need to think your answer through before posting.

The law governing 401Ks DOES make it extremely difficult to get your money out without paying a penalty. That's by design.

And I'm not asking or suggesting that you don't post in this forum. I'm just exaplaining that you need to be more careful that your answers are accurate and pertinent. Your advice in this thread wasn't