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    Dource41's Avatar
    Dource41 Posts: 1, Reputation: 1
    New Member
    		  
    #1

    Feb 4, 2009, 02:53 PM
    401K new exemptions
    We had to take funds out of our 401k to stop a foreclosure on our house. Is there a new exemption for this.
    ScottGem's Avatar
    ScottGem Posts: 64,966, Reputation: 6056
    Computer Expert and Renaissance Man
    		  
    #2

    Feb 4, 2009, 03:00 PM

    No. To prevent a foreclosure ALLOWS you to take an inservice withdrawal. Plans are not required to permit withdrawals at all. They can choose to permit, permit only hardship withdrawals or not permit. To prevent a foreclosure does qualify as a hardship, but even if the withdrawal qualifies as a hardship, taxes and penalties are still due.

    There was some talk about suspending penalties for certain withdrawals, but I don't think anything was signed into law.
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
    Senior Tax Expert
    		  
    #3

    Feb 10, 2009, 01:06 PM
    Unfortunately, Scott is correct. You WILL have to pay the 10% Early Withdrawal Penalty, plus whatever tax is due to the IRS and the state.
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