Thank you for allowing us to assist you with this problem. I am not fully aware of what prior steps you have taken.
In an emergency, you may need to tap those funds, but getting money out of your company’s 401(k) plan can be especially tricky before you reach the official distribution age of 59 ½.
While you are employed by the company that offers a 401(k), you usually have
an opportunity to access savings under certain hardship conditions. The
drawback however, is that qualifying for this provision can be difficult. Just as
the IRS has its list of qualifying financial hardships (medical expenses or
disability), individual plans often do as well. That means you must qualify under
both sets of rules, which may be more difficult.
I am sure the need for a car is a very personal hardship for you but that would not qualify under the IRS standards so Im not surprised that your company plan does not allow it either. However, there may be other options.
Not every plan allows non-hardship withdrawals. If yours does, you have an
opportunity to take money out of your account and redistribute it as you see fit.
Generally the best bet is to roll the amount into an IRA. That way you avoid taxes,
and you have a larger range of investment options, usually with lower
administrative fees. Rollovers made directly to the owner of the 401(k) must be
reinvested in a qualified plan within 60 days or be faced with a 10% penalty.
Now, once the money is in an IRA you would be subject to the IRA withdrawl rules and fees but it would be easier to take money out of an IRA than your company 401K.
If you’re in a bind, a 401k loan may be your only remaining option. A loan from your
401(k) allows you to borrow against your savings. Some use restrictions similar
to those for hardship withdrawals. The loan must be paid back, usually within
five years, and loans cannot be rolled over into an IRA. However, if you leave a
company and still have an outstanding 401(k) loan, you’re oftentimes required
to pay it back in a short amount of time, usually one to two months.