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    Temeca24's Avatar
    Temeca24 Posts: 1, Reputation: 1
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    #1

    Jul 6, 2010, 10:43 AM
    Hardship letter for 401k withdrawal?
    Will they let me withdraw from my 401k to get a transmission for my car which is out of fix and I have no other means of transportation?
    JudyKayTee's Avatar
    JudyKayTee Posts: 46,503, Reputation: 4600
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    #2

    Jul 6, 2010, 10:56 AM

    Who do you have to ask? Are you concerned about penalities, taxes?
    ebaines's Avatar
    ebaines Posts: 12,131, Reputation: 1307
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    #3

    Jul 6, 2010, 12:47 PM

    Most plans do not allow withdrawals by active employees except for certain "hardship" conditions as mandated by law. Fixing a car's transmission does not qualify as a "hardship." But plans vary, so if you are still employed at the company where the 401(k) is located, you'll have to ask HR or the plan administrator whether withdrawals are allowed, and under what circumstances. A possible better plan would be to take a loan from your 401(k) account rather than a withdrawal, as this avoids any taxes or penalties.

    If the 401(k) is with a previous employer, then you can most likely take the withdrawal, BUT you will have to pay income taxes (federal and state/local, if applicable) PLUS the 10% early withdrawal penalty. Again, you'll have to ask the plan administrator what the rules are for making a withdrawal.
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