Business Retirement Accounts » Single Participant 401(k) Plans Financial Hardship Distributions
An individual 401(k) participant may request a financial hardship distribution from their account if this allowed in the plan document. The distribution must be due to severe and immediate financial hardship and taken to satisfy one or more of the following conditions: | » | Medical expenses exceeding 7.5% of gross income | | » | Purchase of a primary residence | | » | Payment of tuition for the next year of post-secondary education for the shareholder, spouse, or dependents | | » | Prevention of eviction from, or foreclosure on, a principal residence | Additionally, the participant must have exhausted all other sources available to them including savings accounts, insurance coverage, loans from commercial credit institutions and loans from the individual 401(k). Limited amounts may be available to the participant in a hardship distribution. Hardship distributions are subject to the premature distribution penalty rules. |