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Are there any tax consequences for taking a financial hardship withdrawal?

April 26, 2017consequences financial hardship taking tax withdrawal

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Are there any tax consequences for taking a financial hardship withdrawal?

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You may owe at least three and possibly four different types of taxes on your financial hardship, including federal and state income tax, a 10% federal excise (penalty) tax, and possibly a state excise (penalty) tax. Your financial hardship distribution must be added to your annual income for federal and state income reporting purposes. Failure to do so could result in further penalty taxes by the IRS. You are strongly advised to consult a tax professional regarding these issues.