What are the tax consequences of taking a hardship withdrawal?
By taking a hardship withdrawal you will be incurring a taxable event, meaning that the money you take from the plan is taxable in the year in which it is taken. Also if you are below the age of 59 1/2 you will also be subject to a 10% early withdrawal penalty. Return to top Contribution Suspension Once you receive a hardship distribution, you cannot contribute to the retirement plan for six (6) months, this is called a “contribution suspension.” Failure to suspend contributions will result in the contributions being forfeited and re-categorized as ordinary income.
By taking a hardship withdrawal you will be incurring a taxable event, meaning that the money you take from the plan is taxable in the year in which it is taken. Also if you are below the age of 59 1/2 you will also be subject to a 10% early withdrawal penalty. Return to top Contribution Suspension Once you receive a hardship distribution, you cannot contribute to the retirement plan for six (6) months, this is called a “contribution suspension.” Failure to suspend contributions will result in the contributions being forfeited and re-categorized as ordinary income.
