topic Early withdrawal of 401k for health insurance deductibles in Retirement tax questions

Early withdrawal of 401k for health insurance deductibles

Eokyere — Thu, 01 Aug 2019 05:18:10 GMT

I left a company about 2 years ago and want to withdraw my 401k contribution to pay pay for my health insurance deductible. How do go about it without incurring s penalty

Re: Early withdrawal of 401k for health insurance deductibles

Anonymous — Thu, 01 Aug 2019 05:59:19 GMT

assuming even if this would qualify as a hardship distributions, it is a taxable event. To make matters worse, if you are under the age of 59½, you are also subject to the 10% early withdrawal penalty.

if you have other funds available, it might not even qualify as a hardship distribution but just a normal distribution subject to the same penalties and taxes.

Re: Early withdrawal of 401k for health insurance deductibles

dmertz — Thu, 01 Aug 2019 16:33:54 GMT

Since you are no longer employed with the company, distributions are permitted from the 401(k) without them having to be hardship distributions.

Since you are asking about early withdrawals, presumably you are under age 59½. If you left the company in or after the year your reached age 55, distributions from the company's 401(k) will be exempt from penalty. Otherwise, distributions used to pay out-of-pocket medical expenses are exempt from penalty to the extent that these expenses exceed 10% of your AGI.