What Is a 401k Hardship Withdrawal?
A 401k hardship withdrawal is the early removal of some, or all, of an investor’s money, contributed to his or her 401k plan. It can provide some much-needed financial relief in difficult economic times. Penalties for early withdrawal can be costly. When all other options have been exhausted and certain criteria are met, however, it can mean access to quick cash when a person needs it the most. To qualify for a 401k hardship withdrawal, the contributor needs to prove extreme financial need. If the money is needed to avoid eviction or foreclosure of a home, approval is usually obtained. Also, funds can often be taken out to buy a home, if the purchase is for a primary residence.
