Thank you for trusting your question to JA today. I am a licensed attorney with over a decade of law practice and over 20 years of experience in the legal field. I’m happy to be of assistance.
Typically, when you a leave a job, for whatever reason, your 401k is rolled over into an IRA fund so that it remains in the tax shelter but is connected to you rather than the job. You would need to discuss that roll-over plan with the employer so that it can be initiated.
If you would want to take that money now, that's a more difficult prospect because 401k's are intended for use in your 60's and 70's, as a retirement vehicle. As such, they place penalties on earlier use. However, in situations of permanent disability, there is the possibility of early withdrawal based on hardship. The disability has to be pretty serious though; either terminal, permanent or at least long last (with no reasonable expectation of immediate recovery). You have to be able to prove to the IRS that you can engage in no substantial gainful activity. We're talking about things like inoperable cancer, severe brain damage, complete lost of speech, loss of multiple limbs, sight or hearing that is permanent, etc.
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