In most cases, taking a 401k distribution before you reach retirement will cost you a 10 percent early distribution penalty. However, there are provisions that allow you to withdraw money in the case of a hardship. Here are the basics of the 401k hardship distribution process.
In order to determine whether you can take a hardship distribution, you first need to see if your plan allows them. Not every 401k plan allows hardship distributions, as it is up to the plan administrator to decide if they will be allowed. If they are allowed, you should be able to withdraw the amount of money you need without incurring any penalties.
According to the IRS, there are a few situations that would qualify as a hardship. If you are paying for medical expenses, funeral expenses, college tuition, house repairs or keeping your house out of foreclosure, you can use your 401k money. Other than those expenses, you should not be using your money for a hardship withdrawal.
How to Get Access to the Money
In order to gain access to the funds from your 401k, you will need to contact your plan administrator. You will have to fill out a hardship withdrawal request, and if it is approved, they will issue you a check in the requested amount.