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Unfortunately your finance department is correct. Generally, distributions of elective deferrals cannot be made until one of the following occurs:
A 401(k) plan may allow employees to receive a hardship distribution because of an immediate and heavy financial need. Hardship distributions from a 401(k) plan are limited to the amount of the employee’s elective deferrals and generally do not include any income earned on the deferred amounts. If the plan permits, certain employer matching contributions and employer discretionary contributions may also be included in hardship distributions. So you would not be allowed the entire amoount in the account even in a hardship distribution.
I wish I could tell you differently but the plan is held to the tax laws just like the employees and if they did anything that was not allowed it would place the entire plan in jeopardy.
So I will need to resign to receive the money that I saved. I guess a local attorney would be my logical next move.
That or take the loan if it is offered. You would have years to pay it back and it would not generate a taxable event for you.
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