Hardship Withdrawal

[brjohn92]

Hello

Long story short im in school and I found out recently that I am short a class to qualify to sit as a CPA. My job requires I have it soon. I did research and found an old 401k that had almost enough to cover the cost and they allowed tuition expense as a category. I was able to get it approved since I had to pay for the class up front. My question is it okay that I did this since they allowed me? I want to make sure I'm doing the right thing. Also, any advice on what documents I should save for tax prep would be helpful. Do I need to provide a receipt of the class, for example?

[BillM223]

You can withdraw money from a 401(k) plan for any reason at all...the problem is whether or not you will owe a 10% early withdrawal penalty in doing so.

According to this IRS table, Education is not a valid exception for an early withdrawal from a 401(k) plan. It would be if the 401(k) was actually an IRA,

Therefore, if I have your circumstances correctly, you will owe a penalty of 10% of the withdrawal when you do your return. It is up to you to decide if this is the right thing for you.

Whether or not you need to save any receipts depends on the circumstances - is this course part of a degree program at a college or university? If so, then you may be eligible for the American Opportunity Credit or the Lifetime Learning Credit. But if this something else, then possibly not. We would need more information on your situation to say more.