Can I make a hardship withdrawal from my 401(k)?
Yes, if your 401(k) plan allows hardship distributions, you can withdraw money for yourself, your spouse, or your dependent for what the IRS deems "an immediate and heavy financial need”. Your plan may allow withdrawals for some or all of the following reasons:
- Certain medical expenses
- The purchase of your main home
- Tuition and educational expenses
- Payments to prevent eviction or foreclosure on your main home
- Burial or funeral expenses
- Certain expenses for the repair of damage to your main home
It's up to your employer and the plan custodian to approve your request for a hardship withdrawal.
Unlike a loan against your 401(k), a hardship withdrawal can’t be repaid. It will be treated as a taxable distribution and reported on a 1099-R. Also, if you’re under age 59 1/2, you may have to pay a 10% early distribution penalty if you don’t qualify for an exception. In most cases, you can’t make contributions to the plan again for at least 6 months following your withdrawal.