View Full Version : 401k Hardship
rhonda brooks
Mar 31, 2010, 02:09 PM
My husband is disabled andf in the last stages of cemantic demcia,I am 42 years old he is 50 we have two young teenage daughters ,my husband has gotten disablity ,now he doesn't qualify for medicaid ,I am the only caregiver so I can't work,I need to take all of 401k and use it for expenses,will I have penalities?and if I take out all 20,000 it will put us in a higher tax bracket next year.what will happen to taxes next year? Need info thank you
ScottGem
Mar 31, 2010, 03:28 PM
First its not a good idea to piggyback your question on someone else's. This can lead to confusion. You should start a new thread. So I've moved your question to its own thread.
Yes, even if you qualify for a hardship withdrawal, you will still have to pay the 10% penalty. Plus it will be added to your taxable income from 2010 which may throw you into a higher bracket, costing you more.
Check with his plan administrators.
ebaines
Apr 3, 2010, 02:04 PM
ScottGem: I must disagree with your answer here - distributions from a 401(k) due to total and permament disability do NOT incur the 10% early withdrawal penalty. She WILL have to pay income tax on it though.
ScottGem
Apr 3, 2010, 09:03 PM
ScottGem: I must disagree with your answer here - distributions from a 401(k) due to total and permament disability do NOT incur the 10% early withdrawal penalty. She WILL have to pay income tax on it though.
I don't disagree with that, but it was unclear who the 401K belonged to.
ebaines
Apr 4, 2010, 05:41 PM
I don't disagree with that, but it was unclear who the 401K belonged to.
Upon rereading the OP's question - you may be right! It's not clear whether the OP is asking about taking money from her own 401(k), or her husband is taking money from his. Based on a different question that the OP posted at the same time, in which she says SHE is disabled and taking money from her account - see: https://www.askmehelpdesk.com/other-money-services/401k-hardship-withdrawel-what-penalties-am-disabled-461632.html . From this I assumed that the disabled person (whether it's the husband or the wife) was taking a withdrawal from his/her own account.
To Rhonda: If YOU are disabled then YOU can take a withdrawal from YOUR account without penalty. But if your husband is disabled then if you take a withdrawal from your account you will owe the 10% penalty. I hope this is clear now.