[iammikey]

Hi ! My names Mike and I was just curious about something. You see I got fired from my job, and I'm in a bit of a situation now with my rent and my car payment! OI!!
I called my 401k plan and asked to take a hardship, and she said no you can't take a hardship you would have to take a loan, but you see I told here will I'm no longer with the company, and that's when she told me I had to take a "DISTRIBUTION". OIIII!!
The company takes 20% of it and some other mumbo jumbo!! Oh my gooodddddddd...
I thought you were applicable for a hardship in times of need? This is a very neeeeedie time, and I'm not even with the company any longer! I guess I'm asking are they screwing with me? Is there someway I could work away around this to get all my money? I think it's a bit unfair, but hey lifes unfair right? HAh but if I can avoid it pleaaaaase helpe me someone it would be greaaaatfully appreciated. THAAANKK YOU!!

Sincerely,

MiKEY!

P.S. If any of you play Warcraft 3 modifications or UMS let me know hit me up and we can kick it and play some! MASS AXE THROWERS FTW!! :)

[ScottGem]

The definition of hardship is very narrowly defined by the IRS. Generally they fall into the following:
O medical expenses for the employee or dependents;
O purchase of a principal residence;
O payment of tuition for the next semester for the employee or dependents;
O payment to prevent eviction or foreclosure.

The Plan admins are therefore not screwing with you. Even if they DO allow the withdrawal you pay a 10% penalty up front. Plus, the gross amount of the withdrawal is subject to tax. They withhold 20%, but you don't know your full tax liability until you file your return.

The reason for these rules are because you have not paid taxes on the money previously. Your contributions are taken out pre-tax. Plus the earnings have not been taxed either. Finally, 401Ks are meant for retirement. If you take it out before, you are leaving yourself unprovided for at retirement.