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evsaranzak · Jul 16, 2006, 11:29 PM

:confused: My husband who is 44 yrs old just lost his job & is having a hard time finding another one. He worked for this company for about 2 1/2 years & has accumulated a little money in his retirement account.

The only money we currently have coming in is my child support which is a far cry from what we need monthly to pay the bills on our house that I inherited from my parents. We also have 2 minor children.

We have no money put aside. My question is would cashing out his retirement account for the above said reasons be considered a hardship withdrawal? We desperately need money for our bills along with everyday necessities. As far as taxes & penalties go--what makes a hardship withdrawal different from just cashing in the IRA?

Thank you--I would appreciate more than words can say any information that you can give us. Thanks again, Evelyn:(

walt17 · Jul 22, 2006, 02:02 PM

Evelyn,
I do not believe your situation would qualify to avoid the penalties. The type of IRA is important. Traditional IRA: taxes and penalties apply. ROTH IRA: you can withdraw your contributions, but not any gain, without paying taxes.

Walt

ScottGem · Jul 22, 2006, 06:07 PM

While it may appear to you that there is a hardship, it does not appear to be covered under IRS rules. Check with the admins of the account.

There is also some confusion in yoiur use of terms. IRAS are not company accounts. They are individual accounts. Also you don't mention the type of retirement account. Defined Benefit plans rarely vest before 5 years. Defined Contribution plans like 401Ks can accumulate money immediately.