Can you take money out of your 401K for any reason? Or does it have to be a "hardship loan?"

Bob's wife

Member
I am sorry. I am having a hard time finding an answer to this question and finding the necessary forms to get the ball rolling. Any advice and guidance would be awesome!
 

Jones

fILE A GRIEVE!
Staff member
Loan Rules
  1. Maximum Loan Amount is limited to 50% of your vested account balance or, if lower, $50,000 minus the difference between the highest outstanding loan balance in the previous 12 months and the current outstanding loan balance.
  1. Repaying an outstanding loan will not necessarily increase the amount permitted as a new loan.
  1. Assets in the Self Managed Account (SMA) are included in the Loan Availability amount, but are not readily available.
  1. SMA assets required for the desired loan amount will first need to be sold and transferred to the Core account before those assets can be used for the loan.
  1. There is a $75.00 charge for each hardship loan. If the documentation you provide showing proof of hardship does not meet the requirements for processing, you will be charged an additional $75.00 each time the loan is reviewed.
  1. Annual Processing Fee - $25 payable in quarterly installments of $6.25
  1. Purchase of a primary residence.
  1. Post-secondary education expenses.
  1. To prevent eviction from or foreclosure on your primary residence.
  1. Unreimbursed medical expenses.
  1. Payment for burial or funeral expenses for your deceased parent, spouse, children or other dependents.
  1. Expenses for the repair of any damages to your principal residence that would qualify for the casualty deduction for federal income tax purposes.
  1. Adoption-related expenses.
  1. You may have up to two loans outstanding at any time.
  1. Repayment of your loan plus interest is made through after-tax payroll deduction.
  1. You must repay the loan in full within 90 days after termination or it will be considered a taxable event, subject to all current taxes and any early withdrawal penalties.
  1. Across all UPS sponsored plans in which participate or have participated, if you have/had an outstanding loan, it may impact your maximum amount for a new loan.
  1. If you default on a loan, you will not be permitted to take another loan until the defaulted loan is repaid. The Plan’s default provision occurs 90 days from termination or missed payment.
You have up to 5 years to repay a non-residential loan and up to 20 years for a residential loan.

Withdrawal Rules
  1. Prior to age 59 1/2, you may take a hardship withdrawal for the following reasons:
  1. Purchase of a primary residence.
  1. Post-secondary education expenses.
  1. To prevent eviction from or foreclosure on your primary residence.
  1. Unreimbursed medical expenses.
  1. Payment for burial or funeral expenses for your deceased parent, spouse, children or other dependents.
  1. Expenses for the repair of any damages to your principal residence that would qualify for the casualty deduction for federal income tax purposes.
  1. You must first exhaust all other loan and withdrawal possibilities before requesting a hardship withdrawal.
 
Loan Rules
  1. Maximum Loan Amount is limited to 50% of your vested account balance or, if lower, $50,000 minus the difference between the highest outstanding loan balance in the previous 12 months and the current outstanding loan balance.
  1. Repaying an outstanding loan will not necessarily increase the amount permitted as a new loan.
  1. Assets in the Self Managed Account (SMA) are included in the Loan Availability amount, but are not readily available.
  1. SMA assets required for the desired loan amount will first need to be sold and transferred to the Core account before those assets can be used for the loan.
  1. There is a $75.00 charge for each hardship loan. If the documentation you provide showing proof of hardship does not meet the requirements for processing, you will be charged an additional $75.00 each time the loan is reviewed.
  1. Annual Processing Fee - $25 payable in quarterly installments of $6.25
  1. Purchase of a primary residence.
  1. Post-secondary education expenses.
  1. To prevent eviction from or foreclosure on your primary residence.
  1. Unreimbursed medical expenses.
  1. Payment for burial or funeral expenses for your deceased parent, spouse, children or other dependents.
  1. Expenses for the repair of any damages to your principal residence that would qualify for the casualty deduction for federal income tax purposes.
  1. Adoption-related expenses.
  1. You may have up to two loans outstanding at any time.
  1. Repayment of your loan plus interest is made through after-tax payroll deduction.
  1. You must repay the loan in full within 90 days after termination or it will be considered a taxable event, subject to all current taxes and any early withdrawal penalties.
  1. Across all UPS sponsored plans in which participate or have participated, if you have/had an outstanding loan, it may impact your maximum amount for a new loan.
  1. If you default on a loan, you will not be permitted to take another loan until the defaulted loan is repaid. The Plan’s default provision occurs 90 days from termination or missed payment.
You have up to 5 years to repay a non-residential loan and up to 20 years for a residential loan.

Withdrawal Rules
  1. Prior to age 59 1/2, you may take a hardship withdrawal for the following reasons:
  1. Purchase of a primary residence.
  1. Post-secondary education expenses.
  1. To prevent eviction from or foreclosure on your primary residence.
  1. Unreimbursed medical expenses.
  1. Payment for burial or funeral expenses for your deceased parent, spouse, children or other dependents.
  1. Expenses for the repair of any damages to your principal residence that would qualify for the casualty deduction for federal income tax purposes.
  1. You must first exhaust all other loan and withdrawal possibilities before requesting a hardship withdrawal.
If you are 55 or older and separated from employment tmyou can take the money out penalty free
 

Jones

fILE A GRIEVE!
Staff member
Yes it is
Unfortunately I know too many people that spent their 401k in 2008 and 2009. That money would he tripled by now
It might have been too early for those folks, but everyone is not in the same boat.
 

Jones

fILE A GRIEVE!
Staff member
Who knows when it's the right time?
In your fifties is too early to withdrawal.
Blanket statements are pretty much always wrong. If you've got a good plan it's ok, if you've got a bad plan it's not. People are different.
 
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