Request for hardship withdrawals
Sometimes, no matter how much we plan, an unforeseen emergency or unexpected large expense can arise.
Hardship withdrawals can be made for “immediate and heavy” financial need, according to the Internal Revenue Service, to pay for things like medical bills, a down payment for a new home, college tuition, rent or mortgage to prevent eviction or foreclosure, funeral expenses and certain home repairs.
Hardship withdrawals can be taken against the 401(k) plan and the 457 plan.
There are two different types of hardship applications for the 401(k) plan:
- Safe Harbor Hardship application – the IRS provides defined circumstances for the hardship. Simple application process, accompanying documentation is required.
- Facts and Circumstances Hardship application – this application is for circumstances not included in the Safe Harbor application. A narrative explaining the circumstances, supporting documentation, and an expense/income report are all required for this application to be reviewed. This application will be submitted to County Counsel for final approval.
A hardship application for withdrawing funds from the 457 plan include the following:
- A narrative explaining the circumstances, supporting documentation, and an expense/income report are all required for this application to be reviewed. This application will be submitted to County Counsel for final approval.
Completed hardship applications and supporting documentation should be submitted by email to firstname.lastname@example.org.
For questions regarding Hardship Withdrawals, contact Deferred Compensation at 805/654-2620 or by email at email@example.com.
Hardship Withdrawal Applications and Tutorials
Did You Know?
Although a hardship withdrawal may seem like a financial lifeline, it can come with some consequences.
- Hardship withdrawals are treated as taxable income so it will impact your tax situation for that tax year.
- If you are under 59 1/2, there will be an additional 10% penalty for a withdrawal from your 401(k) plan.
- When you take hardship withdrawal from your 457 plan, you will be prohibited from contributing to that plan for 6 months following the withdrawal.