Hardship Withdrawal From A 401k Essay

800 Words2 Pages

It is generally not allowed to withdraw money from an employer-sponsored retirement account, but there are acceptations. If the employee is faced with serious hardships that affect his or her financial situation, the Internal Revenue Service (IRS) offers provision for hardship withdrawals. Some employers do not allow such withdrawals, but if an employer does allow it, the employee must write a hardship withdrawal letter that gives the reason with details that he or she needs the money. It is recommended to include documentation that proves the case.

A hardship withdrawal from a 401k is not an easy process. The employee first needs to review the IRS guidelines to determine if he or she qualifies to make a withdrawal. The hardships need to be immediate and very heavy financial burdens. Some of the main reasons that qualify are:

• Medical expenses for the employee or a dependent
• Down payment for a …show more content…

It may also be sent by certified mail with a return receipt request. The employee is under no obligation to repay a hardship distribution. Since the process of getting hardship money from a 401k is long and involved, the employee should start the process as soon as he or she knows that they are in financial trouble. If they wait too long, it could add to their financial difficulties.

Below is a sample hardship withdrawal letter from a 401k. The writer should use a formal style and make sure it has no spelling or grammatical errors. It should be addressed to the person in charge of the company’s retirement accounts. The writer should keep copies of all communications that relate to asking for a withdrawal from the account. If there are any documents that prove or support the reason for asking for the withdrawal are available, copies of those should also be enclosed with the letter. Employee’s Name
Employee’s

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