Distribution Financial Hardship - 401k - Fidelity 2025

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For example, some 401(k) plans may allow a hardship distribution to pay for your, your spouses, your dependents or your primary plan beneficiarys: medical expenses, funeral expenses, or. tuition and related educational expenses.
If the plan language allows hardship distributions only under specific circumstances, the plan cant be more liberal in its operation. For example, if the plan states hardship distributions can only be made to pay tuition, then the plan cant permit a hardship distribution for any other reason, such as a home purchase.
How Do You Prove Hardship for a 401(k) Withdrawal? You do not have to prove hardship to take a withdrawal from your 401(k). That is, you are not required to provide your employer with documentation attesting to your hardship. You will want to keep documentation or bills proving the hardship, however.
➢ Uninsured medical expenses for yourself, your spouse, or your dependents. education for you, your spouse, or your dependents. ➢ Prevention of eviction from, or foreclosure of, your principal residence. ➢ Payments for burial or funeral expenses for your deceased parent, spouse, child, or dependent.
A hardship distribution is a withdrawal from a participants elective deferral account made because of an immediate and heavy financial need, and limited to the amount necessary to satisfy that financial need. The money is taxed to the participant and is not paid back to the borrowers account.
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Because withdrawing or borrowing from your 401(k) has drawbacks, its a good idea to look at other options and only use your retirement savings as a last resort. A few possible alternatives to consider include: Using HSA savings, if its a qualified medical expense. Tapping into emergency savings.
Acceptable Documentation Lost Employment. Unemployment Compensation Statement. (Note: this satisfies the proof of income requirement as well.) Termination/Furlough letter from Employer. Pay stub from previous employer with.

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