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Are income taxes withheld from a financial hardship withdrawal?

April 26, 2017financial hardship income taxes withdrawal

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Are income taxes withheld from a financial hardship withdrawal?

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A financial hardship withdrawal is actually removed from your retirement savings permanently. Unlike a loan, you may not repay this money to your account. Therefore, if you decide to withdraw funds from your account for a financial hardship, you generally must pay regular income taxes on the amount you withdraw. You may elect an amount be withheld for federal income taxes (and some state income taxes) at the time of the withdrawal, but if no election is made, the IRS requires that 10% of the withdrawal be withheld for federal income taxes.