401(k) Hardship Withdrawal: What Is It and How Does It Work? – TheStreet


Hardship withdrawals from your 401(k) account can be a means of dealing with a serious personal financial crisis.

What Is a Hardship Withdrawal?

A hardship withdrawal is an emergency withdrawal from a retirement plan. These may be offered in a 401(k) plan, a 403(b) or a 457 plan. Plan sponsors are not required to offer this option, rather, it’s an elective modification to the plan rules.

Hardship withdrawals, if allowed by your plan, must meet certain criteria set by the plan. Note a plan may decide that not all of these reasons will be acceptable and can pick and choose what constitutes an expense that justifies a hardship withdrawal. The IRS says that a hardship withdrawal “… must be made on account of an immediate and heavy financial need of the employee and the amount must be necessary to satisfy the financial need.” The IRS considers these expenses ones that meet their criteria:



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