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Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 15179
Experience:  15years with H & R Block. Divisional leader, Instructor
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I have over one hundred thousand dollars in a 401K. I am 57

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I have over one hundred thousand dollars in a 401K. I am 57 years old would like to with draw it and pay off my bills. I am willing to pay the taxes and penalties. My wife can no longer work and I am headed for trouble. I could pay off all of my debts and easily live on my salary but my work says that a I cannot touch it until I am 59 1/2. Makes no sense to me. I can take a hardship when my credit and finances are destroyed but I am current on everything and would like to stay ahead of it. I could borrow from it but I cannot affored the payment that it would generate. Any advise?
Submitted: 5 years ago.
Category: Tax
Expert:  Robin D. replied 5 years ago.

Robin D :

Hello and thank you for using Just Answer

Unfortunately your finance department is correct. Generally, distributions of elective deferrals cannot be made until one of the following occurs:

  • The participant dies, becomes disabled, or otherwise has a severance from employment.

  • The plan terminates and no successor defined contribution plan is established or maintained by the employer.

  • The participant reaches age 59½ or incurs a financial hardship.

Robin D :

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.

Robin D :

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.

Robin D :

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.

Robin D :

Please know that you can always come back here even after you click ACCEPT

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