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401K hardship withdraw during Chapter 13

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OhioJen

Junior Member
What is the name of your state (only U.S. law)? Ohio

I have medical bills that have come up since my filing Chapter 13 last year. Can I hit my 401k with a hardship withdraw to pay them?
 


efflandt

Senior Member
If the 401(k) is from a current employer I do not believe you can take a distribution, but you may be able to take a loan. Just be aware that if you lose your job or leave your employer any outstanding balance you do not pay back quickly will be considered a distribution.

If you do take a distribution from the 401(k) of a former employer, it will be taxable. One of the 10% penalty exceptions is "From a qualified retirement plan to the extent you have deductible medical expenses (medical expenses that exceed 7.5% of your adjusted gross income), whether or not you itemize your deductions for the year".

There do not appear to be any 10% penalty exceptions for hardship in IRS Publication 575, since your 401(k) is protected from creditors.
 

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