Are in-service withdrawals from the Plan taxable?
A41: Under the Plan, participants who are still employed by the State may withdraw funds from the Plan due to an unforeseeable emergency (i.e., sudden and unexpected illness or accident, loss of property due to casualty or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the participant’s control) in the amount reasonably necessary to cover the emergency need. Generally, a distribution due to an unforeseeable emergency may not be made to the extent that such emergency is or may be relieved through reimbursement or compensation from insurance or otherwise, by liquidation of the participant’s assets, to the extent the liquidation of such assets would not itself cause severe financial hardship, or by cessation of deferrals under the Plan. In-service withdrawals are included in the participant’s gross income and subject to federal and Hawaii income tax in the year paid to the participant. Refer to the Island Savings Plan website, available at
