401k Withdrawals
Here is a list of the different types of withdrawals an employee can take and the withdrawal forms associated with them.
Please note, withdrawals are not General Purpose Loans. Please refer to 401k Loan Procedure for more information on a general loan.
Hardships: You may withdraw money for financial hardship if you satisfy certain conditions. This hardship distribution is not in addition to your other benefits and will therefore reduce the value of the benefits you will receive at retirement.
Qualifying expenses: A hardship distribution may be made to satisfy certain immediate and heavy financial needs that you have. A hardship distribution may only be made for payment of the following:
Expenses for medical care (described in Section 213(d) of the Internal Revenue Code) previously incurred by you, your spouse, your dependents or your beneficiaries or necessary for you, your spouse, your dependents or your beneficiaries to obtain medical care.
costs directly related to the purchase of your principal residence (excluding mortgage payments).
tuition, related educational fees, and room and board expenses for the next twelve (12) months of post-secondary education for yourself, your spouse, your dependents or your beneficiaries.
amounts necessary to prevent your eviction from your principal residence or foreclosure on the mortgage of your principal residence.
payments for burial or funeral expenses for your deceased parent, spouse, children, other dependents or beneficiaries.
expenses for the repair of damage to your principal residence that would qualify for the casualty deduction under the Internal Revenue Code.
To determine whether a Participant is entitled to a hardship distribution, a beneficiary is someone you designate under the Plan to receive your death benefit who is not your spouse or dependent.
If you have any of the above expenses, a hardship distribution can only be made if you certify and agree that all of the following conditions are satisfied:
(a) The distribution is not in excess of the amount of your immediate and heavy financial need. The amount of your immediate and heavy financial need may include any amounts necessary to pay any federal, state, or local income taxes or penalties reasonably anticipated to result from the distribution;
(b) You have obtained all distributions, other than hardship distributions, and all nontaxable loans currently available under all plans that your Employer maintains; and
(c) If the hardship distribution is made from the Participant's Elective Deferral Account, that you will not make any salary deferrals for at least six (6) months after your receipt of the hardship distribution. If your salary deferrals are suspended, then your deferral election that was in place prior to the suspension will continue in effect after the suspension.
Limitations. The following limitations apply to hardship distributions:
The minimum amount you can request as a hardship distribution is $500.
You must be employed with the Employer at the time of the hardship distribution.
Account restrictions. There are restrictions placed on hardship distributions which are made from certain accounts. These accounts are the ones set up to receive your salary deferral contributions and other Employer contributions which are used to satisfy special rules that apply to 401(k) plans. Generally, the only amounts that can be distributed to you on account of a hardship from these accounts are your salary deferrals. The earnings on your salary deferrals and special Employer contributions may not be distributed to you on account of a hardship. Ask the Administrator if you need further details.
- Inservice - age 59.5, rollover
- Loans for primary residence (normal loans are not requested by form)
- Termination (distribution) – terminated employees
If an employee has money in the ROTH source, they must use the ROTH version of the form.
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