My husband is in the process of filling the form out to withdrawal from his 401K. For the reason he put to prevent eviction. We own a house and we are having trouble paying not just the house bills, but all of our bills. He is asking for $5000. I know as far as paper work and rules that he is eligible for the actual withdrawal, but how do we prove that we are in a tough situation as far as paying everything?
We haven't actually gotten a foreclosure notice... I don't know why it says eviction (isn't that for renters)?
Anyway can someone help me with this? He asked me to mail it tomorrow, but I know they will need some kind of verification or proof.
What can we show them?. it's simply a combination of things.
We had a situation this summer which caused us to be behind ever since.
We are not actually $5000 behind in mortgage, just wanted the funds to get caught up with our mortgage and bills... we ARE behind in our mortgage payments though.

They have already sent the form for us to sign. It just says something about verifying this... and I have no idea how to verify a multiple of situations... because it's not solely a mortgage problem.

Yes... we are fully aware of the consequences of this.

The "hardship withdrawal" rules require that the 401(k) plan allow an active empoloyee participant to make a withdrawal if the money is used for one of several defined "hardship" purposes, one of which is "payments necessary to prevent the eviction of the employee from the employee's principal residence or foreclosure on the mortgage on that residence." Note this provision covers home owners as well as renters. I assume the paperwork you are referring to asks him to certify that this is the case, and if the plan administrator needs any specific proof - such as a copy of a forecosure notice - they will ask for it. They will also want to see that he has taken all possible steps to resolve the debt - such as having already maxed out the loan provision of the 401(k) plan. In other words if there is a loan provision in his 401(k) plan he should take advantage of that first, before asking for a withdrawal. You don't mention whether he has already taken out a loan against the 401(k) - has he?

I assume you already know that if he is allowed to take the widthdrawal he will owe both income taxes (federal and state/local if applicable) plus the 10% early withdrawal penalty.

Yes thank you for your answer. He has taken a loan out already. This is not something we really want to do, but at this time it is necessary. Thank goodness as long as we all stay healthy, things are going to get better, I do know that. It's just right now is difficult time. He knows about the penalties and taxes. He has opted out to not be taxed, but I'm not sure if it's accepted where we are. When we got the form, there was already an X in the box to not be taxed, but that is okay... well sort of. Thank you for your response.

He has opted out to not be taxed, but I'm not sure if it's accepted where we are. When we got the form, there was already an X in the box to not be taxed, but that is okay....well sort of.

I don't understand what you mean by "he has opted out to not be taxed." You have no choice - the withdrawal is taxed no matter what. The admin should withhold 20% for federal tax, but nothing for state/local and none of the 10% penalty is withheld. The actual amount of taxes that you owe on this withdrawal is dependent on your federal tax rate and your state/local rate as well. If you are in the 20% federeal tax bracket, of the $5K withdrwal $1K will go to federal taxes, $500 to the penalty, and (say) 5% to sate/local (of course this depends on where you live), so you will have remaining about $3,200 to actually use on your mortgage payment. So be sure to not spend the entire withdrawal, but keep enough in reserve to pay your taxes by April.

I'm not even sure what I meant by that either... and he already took the papers back to work. If I get a copy, I will update this and let you know exactly what it says. Thank you again.

We decided to suck it up and not go through with it. Were catching up now and doing fine.